In this video, there are two main views concerning the possibilities of reducing WACC by adjusting the gearing ratio to be discussed.
Traditional View and Modigliani & Miller View (M&M View)
Traditionalists believe there is an optimal capital structure, or lowest WACC for a business.
M&M view believes the value of a business (and its WACC) is unaffected by its capital structure.
In the last part of this video, Pecking Order Theory is also shared.
