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Dear Sir,
Estimation of the minimum rate of return on the additional debt financing required to maintain shareholder value
The last part of the answer for the changes in cash flow:
= $ 32.3 m /75% + [ (2,400 x 3.875%) – (800 x 5.6%) ]
= $ 91.3 mIn the answer, why is it using 5.6% instead of 4.65%?
Thanks sir.
He should have used 4.65% (if you have BPP’s Revision Kit you will see that they have corrected it and used 4.65%)
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