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An implicit cost of increasing proportion of debt is:

<p><strong>(a) Tax should would not be available on new debt, </strong></p> <p><strong>(b) P.E. Ratio would increase,</strong></p> <p><strong> (c) Equity shareholders would demand higher return,</strong></p> <p><strong> (d) Rate of Return of the company would decrease.</strong></p> <p> </p>

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Question added by VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.
Date Posted: 2014/09/20
Deleted user
by Deleted user

number     ( C

Ezzidin Ibrahim
by Ezzidin Ibrahim , Financial Controller , Karim Food Industries

(d) Rate of Return of the company would decrease.

Tanveer Qureshi
by Tanveer Qureshi , Director , Qureshi Associates

Option-C.

Deleted user
by Deleted user

(c) Equity shareholders would demand higher return,