The weighted average cost of capital can consist of debt

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The weighted average cost of capital can consist of debt, preferred stock and equity. Which among these sources is the most expensive and the least expensive and why?

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The least expensive is debt , as debt is a cheap source of finance. The interest tax shield from debt , the interest paid on debt is tax deductible. in the event of liquidation, the debt holders gets paid first before the equity holders.

Reference no: EM132343434

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