I just wonder the reason why the cost of equity will also increase as interest rates rise.
Ask the Tutor ACCA FM
investment appraisal
10y ago#1The cost to the company is determined by the rate of return that shareholders demand.
If interest rates increase (and therefore investing money in the bank would get a higher return) then shareholders are going to want a higher return than before if they are investing in shares.
Thanks :)
10y ago#3You are welcome :-)
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