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:

Job Environment

The physical and psychological conditions under which employees work, including factors such as office layout, culture, and safety.

Physiological Capabilities

The natural functions and activities of the body, including its ability to perform physical tasks, adapt, and respond to environmental demands.

Uncertainty Avoidance

A cultural dimension that describes the extent to which people in a society are uncomfortable with ambiguity and uncertainty.

Positive Attitudes

Mindsets or dispositions characterized by optimism and constructive thinking in individuals.