Answer:
it is a process of raising the funds which involves the cost in planning the capital structure, the use of capital should be capable of earning revenue to meet the cost of capital. There are changes in this because of two reasons:
(i) Interest rates are less than dividend rates.
(ii) Interest paid on borrowed capital is an allowable for income tax purposes.
(i) Interest rates are less than dividend rates.
(ii) Interest paid on borrowed capital is an allowable for income tax purposes.
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