Which of the Following Statements Is CORRECT

question 58

Multiple Choice

Which of the following statements is CORRECT?

• A) A change in a company's target capital structure cannot affect its WACC.
• B) WACC calculations should be based on the before-tax costs of all the individual capital components.
• C) Flotation costs associated with issuing new common stock normally reduce the WACC.
• D) If a company's tax rate increases,then,all else equal,its weighted average cost of capital will decline.
• E) An increase in the risk-free rate will normally lower the marginal costs of both debt and equity financing.

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Definitions:

Undue Influence

Improper or unfair persuasion by one party over another, often resulting in decisions or agreements that benefit the influencer.

Clergyman

A male priest, minister, or religious leader, especially one authorized to perform sacred rituals and ceremonies in Christian denominations.

Emotional Susceptibility

A person's tendency to be easily affected by emotional experiences or to be more sensitive to emotional stimuli.

Essential Supplies

Materials or items that are considered absolutely necessary for the operation of a business or during a crisis situation.