Which of the Following Statements Is Most Correct

question 58

Multiple Choice

Which of the following statements is most correct?

• A) The weighted average cost of capital for a given capital budget level is a weighted average of the marginal cost of each relevant capital component which makes up the firm's target capital structure.
• B) The weighted average cost of capital is calculated on a before-tax basis.
• C) An increase in the risk-free rate is likely to increase the marginal costs of both debt and equity financing.
• D) Answers a and c are correct.
• E) All of the answers above are correct.