The Weighted Average Cost of Capital (WACC) Declines as More

question 2

True/False

The weighted average cost of capital (WACC) declines as more of the lowest cost component is added.What limits a firm from using nearly all debt is that as the debt ratio rises, the absolute interest expense gets very large.The
large interest expense reduces income and results in a debt ratio limit even though the WACC continues to decline.

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Definitions:

Hereditary Material

Genetic information passed from parents to offspring, primarily consisting of DNA or RNA in certain viruses.

DNA

A double-stranded molecule consisting of nucleotides arranged in a helical structure, serving as the hereditary material in most organisms.

Purines

Nitrogenous bases found in DNA and RNA that include adenine (A) and guanine (G), playing a crucial role in encoding genetic information.

Pyrimidines

One of the two types of nitrogenous bases found in nucleic acids, including cytosine, thymine (in DNA), and uracil (in RNA).