The D/E ratio for a firm is 0.7. An investment project undertaken by this firm costs 1,000,000 initially and will pay 200,000 at the end of each year for a period of 8 years. The tax rate for this firm is 30%. If the tax savings on interest is 12,600 per year, calculate the cost of equity, rE.

Answer rating: 100% (QA)

Hence the Cost of Equity is 1326 DebtD Equity E ED07 070 As Debt Equity Cost of Project D D 10... View the full answer