An implicit cost of increasing proportion of debt is: | Faculties

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Vikash Gupta

🎓 Tutor III ⭐ 33.56K Points

📊 Financial Management

Q. An implicit cost of increasing proportion of debt is:

(A) Tax should would not be available on new debt
(B) P.E. Ratio would increase
(C) Equity shareholders would demand higher return
(D) Rate of Return of the company would decrease

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✅ Correct Answer: (C) Equity shareholders would demand higher return

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