Current target capital structure is 15% debt, 2% preferred stock and 83% common equity. If changed to 50% equity and 50% debt (by issuing additional debt, and using proceeds to buy back 33% equity and 2% preferred stock, will the cost of debt change? Or will it remain the same as before this change?

Answer rating: 100% (QA)

The cost of debt for a company can change when the capital structure is altered Lets analyze the imp... View the full answer