3-1 dav

reply to the students response in 150 words and provide 1 reference

 

The weighted average cost of capital can consist of debt, preferred stock and equity. Which among these sources is the most expensive and the least expensive and why?

students responce

The least expensive is debt , as debt is a cheap source of finance. The interest tax shield from debt , the interest paid on debt is tax deductible. in the event of liquidation, the debt holders gets paid first before the equity holders.