What is the weighted average cost of capital if a business has a cost of equity of 12%, a cost of debt of 10%, tax rate of 25%,
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Answer:
The two lines intersect (in other words, they have a common meeting points)
Step-by-step explanation:
Thinking process:
A linear equation takes the form of
where , m = gradient
c = y-intercept (point where the line cuts the y-axis)\
Suppose we have these two linear equations:
We can find the point of intersection by solving the two equations simultaneously like this:
sub y = 2x + 4 into equation (2) gives:
2(2x+4) = -6x -1
solving yields - 0.9
Substituting x= -0.9 into equation 1 yields:
y = 2.2
In terms of the Cartesian coordinates (x, y) the point of intersection will be (-0.9, 2.2)
Hence, the point of intersection is a solution of two linear equations.