Define which is lower cost of debt or cost of equity, Financial Management

Which is lower for a given company: the cost of debt or the cost of equity? Explain: Ignore taxes in your answer.

The cost of debt is all the time less as compared to the cost of equity for a given firm. This is since the debt investor is taking a lower risk than the equity investor and hence the required rate of return is lower.

Related Discussions:- Define which is lower cost of debt or cost of equity

Operating cycle, applicability of operating cycle in poultry

applicability of operating cycle in poultry

Evaluate of risk-adjusted discount rate, Q. Evaluate of Risk-Adjusted Disco...

Q. Evaluate of Risk-Adjusted Discount Rate? Illustration: - From the following date state which project is preferable: Year Project A Proj

Budget setting styles, Advantages and disadvantage of pacipatory style of b...

Advantages and disadvantage of pacipatory style of budgeting

Aeromag, Our geologist, Rebecca Paulka, has estimated from the earlier expl...

Our geologist, Rebecca Paulka, has estimated from the earlier exploration that the Malian prospects have a 30% likelihood of containing economic quantities of uranium ore, the Nige

What is a sunk cost, What is a sunk cost? Is it relevant when evaluating a...

What is a sunk cost? Is it relevant when evaluating a proposed capital budgeting project? Explain. A sunk cost is a cash flow that has already takes placed, or that will take

Portfolio construction based on a factor model, Bond management evolution t...

Bond management evolution to some extent is linked to the increased volatility of the interest rate term structures which is in existence since seventies. Bond valuatio

Aggressive approach of financial management, Q. Aggressive Approach of fina...

Q. Aggressive Approach of financial management? A -firm may be aggressive in financing its assets. An aggressive policy is said to be followed by the firm when it uses short-te

Certified public accountant, Certified Public Accountant (CPA) - ACCOUNTANT...

Certified Public Accountant (CPA) - ACCOUNTANT who has satisfied education, experience and examination requirements of her or his jurisdiction essential to be certified as a public

Management accounting and financial management, Q. Distinguish between Mana...

Q. Distinguish between Management Accounting and Financial Management with clear mention of basis of differences. How does the traditional financial manager differ from the mode

State about the audit plan contents, State about the Audit plan contents ...

State about the Audit plan contents 1. Report requirements and terms of reference. 2. A review of business and financial position, reviewing why changes had occurred in curr

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages