Week 2: Factoids Flashcards
1
Q
Should return on investment be larger than or less than the cost of capital? Why?
A
The reason why is because it would not make sense to invest in something that will give you a lower return than how much you have to pay in interest
2
Q
Why is debt cheaper than equity?
A
Debt is tax-deductible
3
Q
PPE
A
Property, plant, and equipment
4
Q
What was GE’s return on investment and cost of capital
A
Roi = 6%
CoC = 8%
