The cost of capital for an all-equity-financed company that pays no dividends is zero.
a. True
b. False
Answers
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0
Explanation:
the cost of capital for an all equity financed company is ""false""
Answered by
3
Answer:
The ‘cost of capital’ for an ‘all-equity-financed company’ that ‘pays no dividends’ is zero. The given statement is False.
Explanation:
This is false since in an all-equity financed company there are equal shareholders who will go through an opportunity cost when they invest in the equity of a firm.
Because they are not using the present opportunities by investing funds in the given company, they will eventually look for a comparable rate of returns for the investments. Therefore eventually the company will have a ‘cost of capital’ for the investment.
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