Traditional approach
Net operating income approach
Net income approach
MM approach
✅ The correct answer is C.
The overall capitalization rate and the cost of debt remain constant for all degrees of leverage. This is pronounced by Net income approach. Net Income Approach suggests that value of the firm can be increased by decreasing the overall cost of capital (WACC) through higher debt proportion.
The overall capitalization rate and the cost of debt remain constant for all degrees of leverage. This is pronounced by Net income approach. Net Income Approach suggests that value of the firm can be increased by decreasing the overall cost of capital (WACC) through higher debt proportion.