If the cost of debt is less than the cost of equity,should the firm use only debt for entire financing ?discuss
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no, it's depend upon rate of return and profitability to firm.
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If you creating equity in the business. The cash flow above the cost is to generate the debt capital is financed as 100%.
Once the business has started generating the debt above the cash when the equity financing becomes free. The bushiness could earn the risk on the above cash with incremental with free returns. Generally it mainly depends on the company
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