### The idea of capitalizing business entirely with debt

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##### Reference no: EM132049850

A) If the cost of debt is typically significantly less than the cost of equity (especially on an after-tax basis), what do you think about the idea of capitalizing (or funding) a business entirely with debt? Explain your reasoning in 200-500 words.

B) If you were a venture capitalist considering providing funding to a cash-constrained firm, what criteria could you use to assess the accuracy of their cash flow forecasts and the adequacy of their requested cash injection? Explain in 200-500 words.

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