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if both the tax rate & interest rate is 10%. then from
where the company raise fund from debt or equity.
and which one is more suitable.
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Answer Posted / amod kumar
debt is always considered as a cheaper source of finanace,
but this statement is correct only when company rate of
earning after adjustind tax is more than the fixed rate of
interest which is to be paid to debt holders. if company
earning is less than the debt rate, from where co will pay
the interst.
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