Q. Which of the following statement is true according to traditional approach of capitalstructure? (Solved)
1. Cost of capital increases with the use of debt after a certain amount of debt and later falls
2. Cost of equity and debt more or less remains constant with the use of debt up to a certain amount of debt
3. Cost of declines and cost of debt remains constant with increase in debt.
4. Cost of equity declines and cost of debt increases with increase in debt
- b. Cost of equity and debt more or less remains constant with the use of debt up to a certain amount of debt