Which One of the Following Statements Related to WACC Is

question 54

Multiple Choice

Which one of the following statements related to WACC is correct for a company that uses debt in its capital structure?

• A) The WACC would most likely decrease if the firm replaced its preferred stock with debt.
• B) The weight assigned to preferred stock decreases as the market value of the preferred stock increases.
• C) The WACC will decrease as the corporate tax rate decreases.
• D) The weight of equity is based on the number of shares outstanding and the book value per share.
• E) The WACC will remain constant unless a company retires some of its debt.

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Definitions:

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