Which of the Following Statements Is True of Marginal Cost

question 23

Multiple Choice

Which of the following statements is true of marginal cost of capital?

• A) All else equal, an increase in the tax rate would decrease the marginal cost of debt capital.
• B) All else equal, an increase in a company's stock price will increase the marginal cost of retained earnings.
• C) All else equal, an increase in a company's stock price will increase the marginal cost of issuing new common equity.
• D) All else equal, an increase in the capital raised in a period will decrease the marginal cost of debt capital.
• E) All else equal, an increase in the weighted cost of capital will decrease the marginal cost of retained capital.

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