Question
ABC ltd has no debt but can borrow at 8%. the company's WACC is currently 12%, and there is no corporate tax. 1- what is
ABC ltd has no debt but can borrow at 8%. the company's WACC is currently 12%, and there is no corporate tax.
1- what is ABC's cost of equity?
2-if the company converts to 30% debt, what will be it's cost of equity?
3- if the comany converts to 60% debt, what will be it's cost of equity?
4- calculate the WACC in (2) and (3) respectively, compare the WACC's and explain what you have found?
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Essentials Of Business Statistics Communicating With Numbers
Authors: Sanjiv Jaggia, Alison Kelly
1st Edition
9780078020544
