Question
Suppose the debt ratio (D/TA) is 50%, the interest rate on new debt is 8%, the current cost of equity is 16%, and the tax
Suppose the debt ratio (D/TA) is 50%, the interest rate on new debt is 8%, the current cost of equity is 16%, and the tax rate is 25%. An increase in the debt ratio to 60% would decrease the weighted average cost of capital (WACC).
True or False?
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Essential Finance Guide
Authors: DK Publishing
1st Edition
078948157X, 978-0789481573
