Suppose you have outstanding debt with an 7.99% interest rate that can be repaid any time, and

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Suppose you have outstanding debt with an 7.99% interest rate that can be repaid any time, and the interest rate on U.S. Treasuries is only 4.93%. You plan to repay your debt using any cash that you don’t invest elsewhere. Until your debt is repaid, what cost of capital should you use when evaluating a new risk-free investment opportunity? Why?

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Corporate Finance The Core

ISBN: 9781292431611

5th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

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