WACC, Beta, cost of common stock, cost of equity
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Explain how a business can reduce the following:
1. WACC- Weighted average cost of capital
2. How do reduce Beta
3. How do you reduce cost of common stock
4. How do you lower cost of equity
5. What is the effect of lowering the cost of equity
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Solution Summary
WACC, Beta, cost of common stock and cost of equity are examined.
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1. WACC- Weighted average cost of capital
Capital structure determines the cost of the capital. Debt is less costly as compared to equity hence by adding debt one can reduce the equity. But excess of debt can lead to very high financial risk and thereby increase the cost of capital. Thus the company has to maintain the right ...
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