The cost of equity and the cost of debt. your chief operating officer argues the...
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Accounting
The cost of equity and the cost of debt. your chief operating officer argues the following:
a. "our stock price is currently $60, and our dividend per share is $6. It means that it costs us 10 percent to use shareholders' cash ($6 divided by $60)."
b. "From our balance sheet our liabilities are $80 million. From our income state- ment our interest expenses are $5 million. Thus our cost of debt is 6.25 percent ($5 million divided by $80 million)."
Which statement is true or false?
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