Capital Structure Flashcards
(3 cards)
1
Q
What are the effects of high gearing?
A
- Equity returns volatility
- Increased possibility of bankruptcy
- Adverse impact on credibility
- Short-termism
2
Q
WACC formula with corporation tax considered
A
(Ke x We) + (Kd x (1-t) x Wd)
3
Q
A
