When Corporate Taxes Are Considered,how Does Leverage Affect the WACC

question 18

Multiple Choice

When corporate taxes are considered,how does leverage affect the WACC?

• A) An increase in leverage will be offset by a decrease in equity financing, thus leaving WACC unchanged.
• B) Changes in leverage will affect the WACC only if the interest rate on debt changes.
• C) Increased leverage will increase the WACC.
• D) Increased leverage will decrease the WACC.

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Definitions:

Blood Urea Nitrogen

A measure of the amount of nitrogen in the blood in the form of urea, used to assess kidney function.

Bicarbonate

An alkaline compound with the formula HCO3-, involved in the buffering of pH levels in the blood and other bodily fluids.

Blood Culture

A laboratory test that checks for foreign invaders like bacteria or fungi in the blood.

Bicarbonate

An alkaline compound with buffering properties, helping to maintain pH balance in various body fluids.