Total Assets Debt Equity Value 120m 40m 80m Cost Of Capital 10 4 Debt Equity Ratio 1 2 5 7 6 6 7 5 8 4 Cost Of 1 (21.55 KiB) Viewed 36 times
The following table estimates the link between the debt-equity
ratio and the cost of debt capital
Total Assets Debt Equity Value 120m 40m 80m Cost Of Capital 10 4 Debt Equity Ratio 1 2 5 7 6 6 7 5 8 4 Cost Of 2 (23.9 KiB) Viewed 36 times
risk free rate is 3%, average return on market is 7%
a) what is current cost of equity capital
Total assets Debt Equity Value £120m £40m £80m Cost of capital 10% 4% ?
Debt-Equity ratio 1/2 5/7 6/6 7/5 8/4 Cost of debt 4.00% 4.02% 4.05% 4.10% 4.50%
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