Which of the Following Statements Is Correct

question 44

Multiple Choice

Which of the following statements is correct?

• A)A firm can use retained earnings without paying a flotation cost. Therefore, while the cost of retained earnings is not zero, its cost is generally lower than the after-tax cost of debt.
• B)The capital structure that minimizes a firm's weighted average cost of capital is also the capital structure that maximizes its stock price.
• C)The capital structure that minimizes the firm's weighted average cost of capital is also the capital structure that maximizes its earnings per share.
• D)If a firm finds that the cost of debt is less than the cost of equity, increasing its debt ratio must reduce its WACC.

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Definitions:

Forest Fires

Uncontrolled fires that occur in wooded areas, which can have devastating effects on wildlife, vegetation, and human structures, often exacerbated by dry conditions and high winds.

Acres

A unit of area commonly used in the United States, equivalent to 43,560 square feet or about 4047 square meters.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, showing how much variation exists from the average.

Snowfall

Precipitation in the form of flakes of crystalline water ice, falling from clouds when air temperatures are below the freezing point of water.