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    sejinki's Avatar
    sejinki Posts: 1, Reputation: 1
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    #1

    Feb 17, 2009, 04:21 PM
    Finance 370 chapter 21
    As a firm initially substitutes debt for equity financing what happens to the cost of capital and why?
    ROLCAM's Avatar
    ROLCAM Posts: 1,420, Reputation: 23
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    #2

    Feb 17, 2009, 04:26 PM

    The cost of Capital in this instance is
    A form of FORMATION EXPENSES.
    This can be treated as an intangible asset.
    Later on one can actually write this off
    As an expense .
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