Since large publicly traded companies could use both debt and equity financing, which would you recommend?
Large publicly traded companies use can use both debt and equity
with optimum capital structure with the objective to minimize cost
of capital.
When company has no debt and only equity then using debt will
reduce cost of capital since interest rates are tax
deductibles.
Hence value of firm will increase.
However highly leveraged publicly traded companies can use equity
finance to reduce risk in the company. This can also optimize cost
of capital.
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