Which of the Following Statements Is CORRECT

question 19

Multiple Choice

Which of the following statements is CORRECT?

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

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