Question: Please show all working and formulas used, thanks! 9. The Chief Financial Officer at BBB Ltd., notes that the company's cost of debt is below

Please show all working and formulas used, thanks! 9. The Chief

Please show all working and formulas used, thanks!

9. The Chief Financial Officer at BBB Ltd., notes that the company's cost of debt is below its cost of equity. They reason that the company should ensure that it is able to increase its borrowings, because otherwise it will be forced to use more expensive equity to finance its new projects. If it used equity then, the company might have to reject some projects that it would have accepted when evaluated at the lower cost of debt. Comment on this reasoning. (6 marks)

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