EquityandDebt分析.pptVIP

Equity and Debt First some revision Debt /Equity Can the Value of the company be affected by changing the proportions of debt and equity used to finance the company? i.e. if debt is 7% and equity 12% then 30%Debt and 70% equity Wacc = .3 x 7 + .7 x 12 = 2.1 + 8.4 = 10.5 Will 2. 50% debt and 50% equity Wacc = .5 x 7 + .5 x 12 = 3.5 + 6 = 9.5 or Debt /Equity Or Will the increased risk cause the required rate of return on equity to rise such that there is no advantage? .5 x 7