This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: = WACC r Problem III: The differences between common stock and debt for the firm could be: 1. No default for dividends if common stock; possible default for debt however; 2. Tax benefits for coupon payment of debt, but no tax benefit for stock’s dividends; 3. Shareholders own the company’s business, while debtholders do not; 4. If the company were to default, debtholders have a privilege over shareholders; 5. Shareholders have control rights over the company’s business (board of directors), while debtholders do not....
View Full Document
- Spring '09
- 5%, Weighted average cost of capital, weighted average cost, B S rWACC