A firm has a debt-to-equity ratio of 1.0. if it had no debt, its cost of equity would be 14%. its cost of debt is 10%. what is its cost of equity if the corporate tax rate is 50%
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,A firm has a debt-to-equity ratio of 1.0. if it had no debt, its cost of equity would be 14%. its cost of debt is 10%. its cost of equity if the corporate tax rate is 50% is 2340
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"rs = 14 + 1.0(1 - .5)(14 - 10) = 14 + 2.0 = 16.0
A firm has a debt-to-equity ratio of 1.0. if it had no debt, its cost of equity would be 14%. its cost of debt is 10%.
So the cost of equity will be Rs 16 if the corporate tax rate is 50%
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