Problem
How do accounting costs differ from economic costs? Explain why two firms that are otherwise identical will have different accounting costs if firm A had financed most of its capital investment by issuing equity stock, whereas firm B had used debt financing (borrowing). How does the corporate profits tax affect the incentive to use debt financing? Explain.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.