Investors crave for companies that are zero debt, believing they are better investments. Ask a CFO or an academic in finance and you would get a different answer. Indeed, debt has a real cost to it, the interest payable. But equity has a hidden cost, the financial return shareholders expect to make. This hidden cost of equity is higher than that of debt since equity is a riskier investment. Interest cost can be deducted from income, lowering its post-tax cost further. Therefore, equity with a slice of debt makes for an optimal capital structure.
Why is debt cheaper than equity? (2024)
Top Articles
Lynchburg Local News
Midlands Mugshots - ABC Columbia
United Amigos Weekly Ad
The Best Social Media Site Still Looks Like It Was Made in the 1990s
AFLAC Cours Action AFL, Cotation Bourse Tradegate
Action Aflac Incorporated | Cours AFL Bourse Nyse - Zonebourse
San Jose Craigslist Com
Korslien Auction
J Auto, Stockholm: Läs kundernas omdömen på Reco.se
2025 Bentley Continental GT Speed Is the Most Powerful Ever Made with 771 Horsepower
Dr. Anthony Spinola, MD - Pittsburgh, PA - Internal Medicine - Book Appointment
Jennifer Barlow, CRNP - Frostburg, MD - Family Medicine - Book Appointment
Latest Posts
Article information
Author: Domingo Moore
Last Updated:
Views: 6261
Rating: 4.2 / 5 (53 voted)
Reviews: 84% of readers found this page helpful
Author information
Name: Domingo Moore
Birthday: 1997-05-20
Address: 6485 Kohler Route, Antonioton, VT 77375-0299
Phone: +3213869077934
Job: Sales Analyst
Hobby: Kayaking, Roller skating, Cabaret, Rugby, Homebrewing, Creative writing, amateur radio
Introduction: My name is Domingo Moore, I am a attractive, gorgeous, funny, jolly, spotless, nice, fantastic person who loves writing and wants to share my knowledge and understanding with you.