why is the marginal cost of capital curve for a firm upward sloping?
edited.
sorry - don’t understand what you mean by “edited”?
Suppose you want to borrow $100. I think you’re good for it so I’ll lend you $100 at 6%. Now for the next $100, I’m beginning to feel a little less sure so it costs you 7%. That next $100 I feel you are overextended so it’s costing you 10%. That next $100, well it’s a point a week from Vinny Needlenose and one way or another you’re paying him.
Because your default risk goes up as you borrow more money.
Nobody defaults on Vinny. Nobody.
sorry guys - i guess this one was pretty obvious in retrospect, but thanks for taking the time to answer it.
You don’t have to apologize for asking a question about the curriculum. If you didn’t get it at first, half of the other people didn’t get it at first.
maratikus Wrote: ------------------------------------------------------- > Because your default risk goes up as you borrow > more money. PERFECT ANSWER…