Hello Sir, For PYQ Sept/Dec 2016 Q1
For proposal 2
As more debt being raised , therefore affect the credit rating, why the answer has not included the extra int after tax due to the lower credit rating on existing debt?
Thanks
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Morada Co
7y ago#1The interest actually paid is the coupon rate, regardless of the credit rating.
The MV depends on the investors required rate of return, which is affected by the credit rating and the examiner has done this in his answer.
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