Question 1: Why is debt a comparatively cheaper form of finance than equity?
Question 2: If debt is cheaper than equity, why do companies approach the equity markets?
Question 3: Can one minimize WACC when there is a constraint on rising debt? If so, how?
Question 4: What are the effects of a corporate tax on the WACC of a business?
Question 5: Is minimizing WACC by having a largely debt-based capital structure a high-risk strategy, given the threat of bankruptcy in an overleveraged business? Explain your answer.
Question 6: What are the extraneous factors which impact the ability of a business to radically alter its debt-equity mix?