Which Is Not True About Debt Financing and the Weighted

question 96

Multiple Choice

Which is not true about debt financing and the weighted average cost of capital?

• A) debt is usually the cheapest source of financing
• B) as the level of debt increases beyond the optimum capital structure, the cost of capital increases
• C) no debt in the firm's capital structure will minimize the firm's weighted-average cost of capital
• D) none of the other answers are correct

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Definitions:

Industry

A classification of businesses that perform similar types of work or produce similar goods and services.

Output

The total amount of goods or services produced by a company or economy.

Marginal Social Cost

Sum of the marginal cost of production and the marginal external cost.

Air Pollutants

Substances in the air that can cause harm to humans and the environment.