debt and cost of capital. Respondents were asked if they believed there was a positive relationship between the amount of debt financing and the cost of capital. The widely accepted theory among academicians is that as the amount of debt financing increases beyond some point, the cost of capital will increase because of excessive risk. Do financial manager have this same perception? Approximately 45 percent of the respondents agreed with the view that as debt financing increases beyond some point, the cost of capital increases. However, 15 percent of the respondents did not agree with this view.