M&M Proposition 2 Formula

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November 28, 2019 at 11:54 pm #554093
iloveaccountancy
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Hi Sir.
When would we use the M&M Proposition 2 Formula? For what purpose?
All I can see from my exam kit is using it for working out the cost of equity for shareholders when no Betas are provided.
Are there any other uses for the exam?
Thank you.
November 29, 2019 at 8:23 am #554120
John Moffat
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It explains how the cost of equity changes with different levels of gearing.
This is all explained in my free lectures.
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