Problem
What is the opportunity cost of (a) borrowed funds and (b) equity capital? Under current tax law, firms can record as an expense the opportunity cost of borrowed funds, but not equity capital. How does this tax law affect the amount of debt the firm wants to incur, compared to the amount of money it raises by selling equity?
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.