Dear sir please help me clarify these points
1. IF company 'A' is planning to acquire company 'B'. If the gearing level. The gearing ratios are currently 0.2 and 0.8 respectively. If the gearing level doesnot change. Do we assume as a whole the company after aquiring B will be Have a gearing ratio of 0.2 therefore the shareholder will want the reuturn for that level of gearing therefore we ignore the gearing level 0.8 of the company B?
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Gearing in calucaltion of cost of capital
2y ago#1Unless the question indicates otherwise you would assume that the gearing was to remain at 0.2.
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