ABC Corporation has a long-term debt weight of 35% and the equity weight of 65% in the capital structure. The business has sh.400,000 of retained earnings left at a cost of 12%. Thereafter, they can issue new common stock at a cost of 17%. ABC can use long-term debt as a source of financing up to the amount of sh.200,000 at 8% and thereafter at 10%.

REQUIRED: determine the break point for  equity?

Answer rating: 100% (QA)

To determine the break point for equity we need to find the point at which the cost of issuing new c... View the full answer