[reneefongg]

Hi Sir, in this case, we can apply
1) traditional theory
2) MM theory (with tax)
3) MM theory (without tax) right?

If I use traditional theory, means the cost of debt for firm has reduce (tax saving), reducing the WACC, increasing its NPV in return.

what about the cost of equity , it will increase due to becoming a levered equity right ?

at the end, isnt WACC still the same? there is no “offset” of low debt to high levered equity right?

i am so confused sir T.T

I do understand, it will reduce cost of debt (increase its total value), but isn’t overall WACC stays the same (as prior to leverage recapitalization situation)?

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