Unless Substantial Amounts of Capital Are Needed,if a Firm Obtains

question 59

Multiple Choice

Unless substantial amounts of capital are needed,if a firm obtains all of its common equity from retained earnings,what will happen to its marginal cost of capital curve?

• A)It will stay flat.
• B)It will rise.
• C)It will fall.
• D)It will be U-shaped.

---

Definitions:

Real Withdrawals

The process of taking out funds from an investment or savings account, adjusted for the effects of inflation, to maintain the purchasing power of the money.

Annual Interest Rate

The percentage increase in the value of money due to interest, calculated on a yearly basis.

Amortize

The method of distributing a loan into a sequence of set payments across a duration, encompassing both the principal amount and interest.

End-of-Year Payments

Financial disbursements made at the conclusion of a calendar or fiscal year, often related to dividends, bonuses, or debt settlements.