Question
ABC's optimal capital structure is 30% debt and 70% equity. Currently, the company has 20% debt and 80% common equity. If the company reduces debt
ABC's optimal capital structure is 30% debt and 70% equity. Currently, the company has 20% debt and 80% common equity. If the company reduces debt level from 20% to 15%, what will happen to the cost of debt, cost common equity, and WACC?
a. increase, increase, increase
b. decrease, decrease, increase
c. decrease, decrease, decrease
d. increase, increase, decrease
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Empirical Finance
Authors: Sardar M. N. Islam, Sethapong Watanapalachaikul
1st Edition
3790815519, 978-3790815511
