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.

---

Definitions:

Modernization

The process through which a society transforms itself from a traditional to a more contemporary form, often seen in technological advancement, social change, and economic development.

Industrialization

The development of industries in a country or region on a wide scale, often leading to significant social, economic, and cultural changes.

Agricultural Development

The process and practices involved in improving farming methods and the production of crops and livestock to increase food supply, efficiency, and sustainability.

Politicization

The process of making an issue political, thereby bringing it into the domain of public debate and decision-making.