Which of the Following Statements Is Most Correct

question 28

Multiple Choice

Which of the following statements is most correct?

• A)An increase in the corporate tax rate would lower the weighted average cost of capital for an average firm, other things held constant.
• B)Depreciation-generated funds have a cost equal to the firm's lowest WACC, and hence they have no impact on the MCC schedule.
• C)As a firm's debt ratio approaches 100 percent, the after-tax cost of debt, rdT, at its lowest level.
• D)Statements a, b, and c are all true.
• E)Statements a, b, and c are all false.

---

Definitions:

Produced

The quantity of goods or services created by a business or production process within a certain period.

Actual Costs

The real costs incurred in the production, acquisition, or realization of goods and services, as opposed to estimated or standard costs.

Direct Materials Price Variances

The difference between the actual cost of direct materials and the standard cost, used to measure cost management efficiency.

Quantity Variances

Differences between the expected and the actual amount of materials, labor, or overhead used in production.