Question
It has been suggested that the WACC of a company is not affected by changes in capital structure, but depends only on business activities. Consider
It has been suggested that the WACC of a company is not affected by changes in capital structure, but depends only on business activities. Consider two companies in the same line of business, Loss plc and Shade plc. If Loss plc is financed only by equity and if its cost of equity is 12%, what will be the cost of equity of Shade plc if it is financed 40% by a 7 % bank loan and 60% by equity? (Work to the nearest 1%)
| A. | 15% | |
| B. | 9% | |
| C. | 10% | |
| D. | 13% | |
| E. | 17% |
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Summary Of Easy Money
Authors: David D. Truex
1st Edition
979-8862477078
