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What are the possible challenges in the real world to estimate Cost of Equity using either CAPM or DDM? What is the effect on your
- What are the possible challenges in the real world to estimate Cost of Equity using either CAPM or DDM?
- What is the effect on your firm's ROE and EPS if you increase your leverage? Discuss the pros and cons of financial leverage.
- According to MM with taxes, the value of the firm is maximized by taking on as much debt as possible. Can you find a real-world company (excluding financial institutions) with 100% or more debt financing? What are the challenges you may face when you run a company in the real world?
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