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Eduncle posted an MCQ
February 21, 2020 • 21:52 pm 0 points
  • UGC NET
  • Commerce

Under which of the following approaches, the cost of equity is assumed to increase linearly with leverage, i.e, the average cost of capital remains constant with increased use of leverage?

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    Eduncle Best Answer

    Net Operating Income Approach suggests that charge in debt of the firm/company or the change in leverage fails to affect the total value of the firm/company.

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