Question

What is typically higher the cost of debt or the cost of equity?

Answer 1

Typically, the cost of equity
exceeds the cost of debt. The
risk to shareholders is greater
than to lenders since payment on
a debt is required by law
regardless of a company's profit
margins. Equity capital may come
in the following forms: Common
Stock: Companies sell common
stock to shareholders to raise
cash.

Answer 2

The company's debt-to-equity or DE ratio is used to evaluate
a company's financial resources and is calculated by dividing the company's total liabilities by its shareholder's equity...

Answer 3

The risk to shareholders is greater than to lenders since payment on a debt is required by law regardless of a company's profit margins. Equity capital may come in the following forms: Common Stock: Companies sell common stock to shareholders to raise cash.