Which One of the Following Changes Would Tend to Increase

question 8

Multiple Choice

Which one of the following changes would tend to increase the WACC for a traditional firm?

• A) Decrease the proportion of equity financing
• B) Increase the market value of the debt
• C) Decrease the proportion of debt financing
• D)Decrease the market value of the equity

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Definitions:

Excise Tax

A tax imposed on specific goods, such as tobacco and alcohol, usually aimed at reducing consumption of these goods or generating revenue.

Supply Curves

A graphical representation showing the relationship between the price of a good and the amount of it that producers are willing to supply.

Excise Tax

A tax levied on specific goods, services, or transactions, often included in the price of products like gasoline, alcohol, and tobacco.