Question
Your firm has a debt-equity ratio of .75. Your pre-tax cost of debt is 8.5 percent and your required return on assets is 15 percent.
Your firm has a debt-equity ratio of .75. Your pre-tax cost of debt is 8.5 percent and your required return on assets is 15 percent. What is your cost of equity if you ignore taxes?
the answer is 19.875% but I need explanation!
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Capital And Finance
Authors: Peter Lewin, Nicolás Cachanosky
1st Edition
0367514559, 978-0367514556
