Cost of Equity Interview Quesion
If my tax rate changes, does this impact cost of equity? Why or Why Not?
Any help here would be greatly appreciated! Thank you
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It effects the levered beta of the company which in turn effects the cost of equity.
Formula: Levered Beta= unlev. Beta(1+(D/E)(1-T))
Thank you!
First answer is correct. This seems like a relatively tough question for a summer analyst to get, no?
Agreed!
So, a tax increase would result in a decrease in cost of equity, correct?
Thank you!
Correct
Walk me through how a $20 increase in revenue would flow through the statement?
Name all the reasons why one company trades higher/lower on an EV/EBITDA basis
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