Typically, According to the Text, the MCC Schedule Is Either

question 10

Multiple Choice

Typically, according to the text, the MCC schedule is either horizontal or rising, which implies that the cost of capital to a firm increases as it raises larger and larger amounts of capital.The rising section of MCC schedule

• A)Is caused by economies of scale in financing.
• B)Would be eliminated (that is, the MCC schedule would be horizontal) if the firm retained all of its earnings.
• C)Results from a change in the debt ratio as the firm expands.
• D)Occurs because the firm must, if it is to expand, be willing to take on riskier and riskier projects, and this causes an increase in the cost of capital.
• E)Results from flotation costs associated with the sale of new common and preferred stock, along with higher debt costs, as the firm's rate of expansion increases.

---

Definitions:

Nitrogen Cycle

The series of processes by which nitrogen and its compounds are interconverted in the environment and in living organisms, including nitrogen fixation and decomposition.

Timber-Harvesting

The process of cutting down trees and transporting them to be processed into wood products or used as fuel.

Net Primary Productivity

The rate at which all the plants in an ecosystem produce net useful chemical energy.

Ecosystems

Complex networks of interacting organisms and their physical environment, functioning as a single unit through cycles of matter and energy flows.