According to the Graph of WACC for Union Pacific, Which

question 69

Multiple Choice

According to the graph of WACC for Union Pacific, which of the following is (are) true?
I.The cost of equity is an increasing function of the debt-equity ratio.
II.The cost of debt is an increasing function of the debt-equity ratio.
III.The weighted average cost of capital (WACC) is a decreasing function of the debt-equity ratio.

• A)I only
• B)I and II only
• C)III only
• D)I, II, and III

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