The trade-off theory was seriously taken under consideration after the debate on the theorem of Modigliani-Miller (Iqbal
et al., 2012). Trade-off theory‟s original version came into being after the debate of Modigliani-Miller theorem. When the
irrelevance theorem was added with the corporate income tax, this favored benefit for debt, i-e; it shields the earnings
from taxes. Firm manager evaluates and analyzes the various costs and benefits of several alternatives of leverage plans.