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Svetach [21]
3 years ago
10

Assume capital markets are perfect. in what way does a? firm's value? and/or wacc change by relying more on debt? capital

Business
1 answer:
BigorU [14]3 years ago
5 0
When a company rely on more debt, the value of the company will fell down at the perception of potential investors.
To determine the risk of investments, investors often compared the ratio between total assets and total debts (assets to debt ratio). Companies with low assets to debt ratio is regarded as a risky investment because it indicates that the company still has not enough capability to generate enough profit to buy its own assets
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