THE TRADITIONAL THEORY OF CAPITAL STRUCTURE (TRADITIONAL SCHOOL THEORY)

if we look at the traditional theory of capital structure, the issue is on WACC which is also the cost of capital that we will use to appraise our investment. If states that WACC is minimised through using less debt in the capita structure then the value of the company will be maximised thus calling for an optimal debt used by the business in the capital structure.

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