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Commerce Short Question | Gkseries

Q.

Which of the following is an implicit cost of increasing proportion of debt of a company ?

[A] P.E. Ratio of the company would increase.
[B] Rate of return of the company would decrease
[C] Tax-shield would not be available on new debts.
[D] Equity shareholders would demand higher return
Answer & Explanation

Answer: Equity shareholders would demand higher return

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