Solved: Benefit of a low cost of capital of debt, Finance Basics

Benefit of a low cost of capital of debt

Problem:

What is wrong with the following argument: "If a firm issues debt that is risk free, because there is no possibility of default, the risk of the firm's equity does not change. Therefore, risk-free debt allows the firm to get the benefit of a low cost of capital of debt without raising its cost of capital of equity"?

Solution Preview :

Prepared by a verified Expert

Finance Basics: Benefit of a low cost of capital of debt

Reference No:- TGS02038895

Now Priced at $20 (50% Discount)

Recommended (93%)

Rated (4.5/5)

Have a Question? (oR Write a Review)

Write atleast 100 words!!

Asked Questions

What facilitate a stable, safe, pain-free cervical posture

In the context of cervical disk injuries, what action is most likely to facilitate a stable, safe, and pain-free cervical posture during strenuous activity?

Interview a bsn-prepared nurse

You will interview a BSN-prepared nurse. You will discuss Obesity and findings from your previous interviews and community assessment.

Does the patient have pearl pupils

In the observation section of a spine assessment, what would be considered a wrong action to perform? Does the patient have PEARL pupils?

Teaching a client with osteoarthritis about self-management

The nurse is teaching a client with osteoarthritis about self-management strategies. Which of the following strategies should the nurse include?

Nurse teaching client with hiv receiving antiretroviral

The nurse is teaching a client with HIV who is receiving antiretroviral medications. Which of the following statements by the client would require follow-up?

Nurse is planning care for client who had hip replacement

Problem: The nurse is planning care for a client who had a total hip replacement via the posterior approach 2 hours ago.

Describe nurse is caring for a client with hemophilia

The nurse is caring for a client with hemophilia admitted for a facial laceration and hemarthrosis of the left knee after falling at home.

Solution Preview :

Prepared by a verified Expert

Finance Basics: Benefit of a low cost of capital of debt

Reference No:- TGS02038895

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

Q : Amount of the projected tax rate shields

Q : Improvements to an italian fruit plantation

Q : How much additional cash will raviv have at the end

Q : Enron hid debt in secret accounts

Q : Benefit of a low cost of capital of debt

Q : Find the transfer function of the code

Q : Present value of the interest tax shields from the debt

Q : Estimate making for the real rate of return

Q : Is this a guarantee of payment