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.

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Definitions:

Accounting Break-even

The point at which total revenues equal total expenses, and the company neither makes a profit nor incurs a loss.

Operating Cash Flow

The cash that a business produces from its regular business activities, essential for maintaining daily operations, paying bills, and funding investments.

Depreciation Expense

A non-cash charge that reduces the value of fixed assets due to wear, tear, or obsolescence over time.

Accounting Sense

Pertains to the manner in which financial transactions are recorded and understood within the realm of accounting.