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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....
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This note was uploaded on 01/17/2011 for the course ACTSC 372 taught by Professor Maryhardy during the Spring '09 term at Waterloo.
- Spring '09