Question
Suppose you have outstanding debt with anan 8.01% interest rate that can be repaid anytime, and the interest rate on U.S. Treasuries is only 4.99%.
Suppose you have outstanding debt with anan 8.01% interest rate that can be repaid anytime, and the interest rate on U.S. Treasuries is only 4.99%. You plan to repay your debt using any cash that you don't invest elsewhere. Until your debt is repaid, what cost of capital should you use when evaluating a newrisk-free investment opportunity? Why
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If the amount use to pay debt is from the cash which could not else be invested anywher...
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Principles of Corporate Finance
Authors: Richard A. Brealey, Stewart C. Myers, Franklin Allen
10th Edition
9780073530734, 77404890, 73530735, 978-0077404895
