WACC for Investment Appraisal OT Flashcards
1
Q
Why bad to raise more debt?
A
There’s more gearing, so more equity is required
2
Q
Raise more equity?
A
Less gearing, better for shareholders
3
Q
What determines how much investors want?
A
How risky the project is and how much finance is raised
4
Q
When to do appraisal for WACC?
A
Level of gearing is unchanged
New investment has same level of risk as the company
