The Cost of Debt, Rd, Is Always Less Than Rs

question 48

True/False

The cost of debt, rd, is always less than rs, so rd(1 − T) will certainly be less than rs.Therefore, since a firm cannot be 100% debt financed, the weighted average cost of capital will always be greater than rd(1 − T).

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Definitions:

Compensatory Damage

Financial compensation awarded to a plaintiff to indemnify them for losses or damages due to another party's negligence or wrongdoing.

Pain and Suffering

A legal term that refers to the physical or emotional distress resulting from an injury, often used to determine compensation in personal injury cases.

Attorney Fees

The costs associated with hiring a lawyer, which may include hourly rates, flat fees, or contingent fees, depending on the legal matter.

Special Damages

Compensation for out-of-pocket expenses incurred as a result of an injury or other harm.