According to the Graph of WACC for Union Pacific, the Following

question 32

Multiple Choice

According to the graph of WACC for Union Pacific, the following is (are) true:
I. cost of equity is an increasing function of the debt-equity ratio.
II. cost of debt is an increasing function of the debt-equity ratio.
III. weighted average cost of capital (WACC) is a decreasing function of the debt-equity ratio.

• A) I only
• B) I and II only
• C) III only
• D) I, II and III

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Definitions:

Raw Materials Inventory

Refers to the total cost of all the materials that are currently in stock and have not yet been used in the production process.

Factory Labor

Work performed by employees in a manufacturing setting, directly involved in producing goods.

Control Account

A summary account in the general ledger that aggregates the details held in a subsidiary ledger for easier oversight and reconciliation.

Factory Labor

The workforce involved in the production process within a manufacturing facility, including direct and indirect labor.