标题: cost of equity [打印本页] 作者: sabaruch 时间: 2011-7-13 16:24 标题: cost of equity
Can't remember which book, but last night I saw:
(assuming Ke is cost of equity assuming all equity)
cost of equity = Ke + (Ke - cost of debt) (1 - t) (D/E)
Can anyone explain the application of this?作者: bingbingliang 时间: 2011-7-13 16:24
Miller and Modigiliani theory of capital structure.
Check it out, very short topic to read and easy to understand作者: bingbingliang 时间: 2011-7-13 16:24
If you're cost of capital was all equity and you increased debt, your new cost of equity would be = Wacc ( no debt which is Previous cost of equity ) + (Wacc - Kd newly raised ) (1-t) D/E
