Gce Model Questions Vol1 2023 Commerce Question 15
Practice objective / multiple choice question 15 from the 2023 Gce Model Questions Vol1 Commerce examination.
A firm can raise capital from two sources only: a bank loan and issuing new shares. The after‑tax cost of the bank loan is 9\% (the loan interest rate is 12\% and the corporate tax rate is 25\%). The cost of new equity is 15\%. The firm wants an overall cost of capital of 10\%. What proportion of the total financing should be obtained from the bank loan (expressed as a percentage, rounded to one decimal place)?
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This is Gce Model Questions Vol1 2023 Commerce Question 15. It is one of the objective questions from the 2023 Gce Model Questions Vol1 Commerce examination.
Difficulty level: Medium .
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