Which of the Following Statements About the Marginal Cost of Capital

question 78

Multiple Choice

Which of the following statements about the marginal cost of capital (MCC) and the investment opportunity schedule (IOS) is incorrect ?

• A)A company's WACC for the planning period is at the intersection of the MCC and the IOS.
• B)The MCC will break when low cost debt runs out and is replaced with higher cost debt.
• C)The IOS ranks projects from highest to lowest according to their individual NPV's.
• D)A break in the MCC may occur because of the floatation costs associated with issuing new stock.
• E)All of the above statements are correct.

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