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The funds to choose between Debt and Equity depends upon several factors. Nonethless, the risk appetite and cost of capital of project sponsors depends upon the favor of high leveraging the project. Some projects with long gestation period like power generating companies prefer more debt to equity. Usually, if the project starts givign early return then more equity is suited which can bear the cost of equity. In corporate tax free countries, theortically mixing of debt with equity does not reduce the WACC. However, tax free countries witnessed high debt funded projects which is mainly to diversify the risk of project into lending entities.
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