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Determine whether the event will cause an increase (I), decrease (D) or no change (N) in the value on the right. Consider each event separately.
Determine whether the event will cause an increase (I), decrease (D) or no change (N) in the value on the right. Consider each event separately. Assume ALL ELSE EQUAL. | Pre-tax Cost of Debt | Cost of Equity | MV WACC |
An increase in Beta (). |
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An increase in the 10-year T-bond yield. |
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An increase in the stock price. |
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A decrease in the price of the companys bonds. |
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An increase in the yield to maturity on a companys bonds. |
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An increase in the tax rate. |
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An increase in investor risk aversion. |
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