Which of the Following Statements Is Correct

question 43

Multiple Choice

Which of the following statements is correct?

• A) The WACC measures the before-tax cost of capital.
• B) An increase in the firm's marginal corporate tax rate will decrease the weighted average cost of capital.
• C) Flotation costs can decrease the weighted average cost of capital.
• D) None of these choices are correct.

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Definitions:

Preponderance Of Evidence

A standard of proof in civil cases, requiring that a claim be more likely true than not true.

De Jure Corporation

Latin for “lawful corporation” a corporation that has met the mandatory statutory provisions and thus received its certificate of incorporation.

De Facto Corporation

A company that acts like a corporation and enjoys some of its benefits, despite not being duly incorporated according to statutory requirements.

Corporation By Estoppel

A defective corporation that has conducted business with a third party and therefore cannot deny its status as a corporation to escape liability.