How Would an Increase in Debt Affect the Cost of Capital?


When debt increases, the level of equity also rises. This rise in equity causes the purchase of capital to become more expensive. An increase in debt would affect the cost of capital, if the debt has been taken to purchase that capital or to fund its maintenance.
Q&A Related to "How Would an Increase in Debt Affect the Cost..."
Businesses frequently use external financing to help pay for expansions and new operations. Although extensive debt use can be bad thing, financing through debt and equity can help
If an increase in the debt-equity ratio makes both debt and equity more risky,
a.If the production function is linear-homogenous, it will increase employment and real wage, due to a limited substitution between capital and labor. But in the case of Cobb Douglas
The reduced peak load requirements would allow utilities to serve more customers and lower fixed costs per customer, thus offsetting some increased variable costs. This would result
About -  Privacy -  Careers -  Ask Blog -  Mobile -  Help -  Feedback  -  Sitemap  © 2014