Economics Capital Budgeting Questions
The impact of debt financing on capital budgeting decisions is that it allows companies to access additional funds to finance their investment projects. By taking on debt, companies can increase their available capital and potentially undertake larger and more profitable projects. However, debt financing also introduces additional costs in the form of interest payments and potential financial risks. Therefore, the impact of debt financing on capital budgeting decisions depends on the specific circumstances and financial position of the company.