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Corporate finance: What determines if the cost of equity is high or low?

Corporate finance: What determines if the cost of equity is high or low?

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Answer #1

Cost of equity= cost of equity means the return on investment the equity shareholder are expecting.

The higher cost of equity determines the investment or project in which equity shareholder are investing is highly risky. i.e high risk project are those which substantially financed by Debt.

The lower cost of capital determines that project or investment has low risk.

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