What effect would a decreased cost of capital have on a firms future investments? The 1 980s

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What effect would a decreased cost of capital have on a firm’s future investments?

The 1 980s were the decade of leveraging, or adding debt to capital structure. A Harvard Business Review article warned managers that if they didn’t ‘lever up with debt a hostile takeover would do it for them. Much of the debt binge had to be reversed in the 1990s—the decade of de-Levering.

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...
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Principles of managerial finance

ISBN: 978-0132479547

12th edition

Authors: Lawrence J Gitman, Chad J Zutter

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