you are given the following information for Lorelei Motorwerke. Note: 300,000 means 300,000 euros. a. Calculate Lorelei?s

Question:

you are given the following information for Lorelei Motorwerke. Note: 300,000 means 300,000 euros.

a. Calculate Lorelei?s company cost of capital. Ignore taxes.

b. How would r_equity and the cost of capital change if Lorelei?s stock price fell to ?25 due to declining profits? Business risk is unchanged.

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...