Corporate Finance, problems for reading 34, question #25 (from 2006 exam)… The answer says that the cost of equity drops from 10% to 9% and references the table on pg. 241. I don’t see where they are getting 9%. I’m getting the new debt/equity would be 30/70 and the cost of equity = 10.5%. I checked the errata and it’s not in there so I know I’m missing something… Can anyone please explain??? TIA
last section of the vignette someone states a divident payment initiation would drop the cost of equity by 100 basis points
Ahhhh, $hit! Thanks.