Assume there are no personal or corporate income taxes and that the firm's WACC is unaffected by its capital structure, then a firm's cost of equity depends on the firm's business and financial risks.

Question

Quizplus · Accepted Answer

The cost of equity is determined by the riskiness of the firm's business and financial structure. In the absence of personal or corporate income taxes, the WACC is unaffected by the capital structure, so the cost of equity is solely determined by the firm's business and financial risks.

Assume There Are No Personal or Corporate Income Taxes and That