Higher return than if everhart uses debt

Reference no: EM131042689

Based on the CAPM, Everhart's cost of equity

b. Philippine debt has a high interest rate. Also, the peso will appreciate so the debt is even more expensive. Everhart should finance with dollar-denominated debt.

c. Philippine debt is cheaper than Philippine equity. The Philippine investor would require a higher return than if Everhart uses debt. Also, there is no tax advantage if Everhart accepted an equity investment.

Reference no: EM131042689

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