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CIMA Exam CIMAPRA19-F03-1 Topic 4 Question 7 Discussion
Actual exam question for
CIMA's
CIMAPRA19-F03-1 exam
Question #: 7
Topic #: 4
[All CIMAPRA19-F03-1 Questions]
Topic #: 4
A company is currently all-equity financed.
The directors are planning to raise long term debt to finance a new project.
The debt:equity ratio after the bond issue would be 30:60 based on estimated market values.
According to Modigliani and Miller's Theory of Capital Structurewithouttax, the company's cost of equity would:
Suggested Answer:
C
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