y, and why is it important to firms?
20.What is the pecking order hypothesis, and how does it influence firms’ capital structures?
21.How can the use of debt serve to discipline managers?
22.Which capital structure theories does the empirical evidence seem to support? Explain.
23.What issues should managers consider when making capital structure decisions?
24.What happens to the component costs of debt and equity when the debt ratio is increased?
25.Write out the Hamada equation.
26.What is the equation for calculating a firm’s unlevered beta?
27.What are some factors that financial managers consider when choosing the maturity structure of their debt?