Question
From the table below, provide the reason why cost of debt increases to 11% from 5% when the debt increases to 90% from 50%. Similarly,
From the table below, provide the reason why cost of debt increases to 11% from 5% when the debt increases to 90% from 50%. Similarly, why does cost of equity increase too?
| Capital Structure | Cost of Debt | Cost of Equity | WACC |
| 50% debt, 50% equity | 5% | 17% | 11% |
| 90% debt, 10% equity | 11% | 20% | 12% |
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International Business Finance
Authors: Michael Connolly
1st Edition
0415701538, 9780415701532
