Which Two of the Following Are Correct, in a World

question 32

Multiple Choice

Which two of the following are correct, in a world with tax but no distress costs, when the capital of a company is almost entirely made up of debt?

• A) WACC is at its highest.
• B) Corporate value is at its highest.
• C) Corporate value is at its lowest.
• D) WACC is at its lowest.

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Definitions:

Frontline Employees

Employees who are directly involved in the production of goods or delivery of services, often serving as the initial point of contact between a business and its customers.

Organizational Change

A process in which a company or institution undergoes a transformation in its structures, processes, or culture to improve effectiveness and adapt to new market conditions or technologies.

Morale Casualties

Refers to individuals or groups experiencing a decrease in morale or motivation, often due to stressful, discouraging, or negative events or environments.