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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › investment appraisal
I just wonder the reason why the cost of equity will also increase as interest rates rise.
The 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.
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