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Debt financing: How does the cost of capital changes when de

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Please assist in responding to the following questions regarding debt financing:

As a firm initially substitutes debt for equity financing, what happens to the cost of capital, and why?

If a firm uses too much debt financing, why does the cost of capital rise?

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This solution is comprised of a detailed explanation to answer what happens to the cost of capital, and why.

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As a firm initially substitutes debt for equity, what happens to the cost of capital, and why?

As a firm initially substitutes debt for equity, the cost ...

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