This lesson focused on leverage and borrowed money. Using examples and solving illustrative problems, we have learned:
The rule of leverage we have learned is to never borrow money when you have a sufficient treasury to finance investments on a 100% equity basis unless the portion of your treasury equal to the borrowed money amount can be put to work at a DCFROR, which is more than the after-tax cost of borrowed money.
You have reached the end of Lesson 11! Double-check the to-do list on the Lesson 10 Overview page [1] to make sure you have completed all of the activities listed there before you begin Lesson 12.