Which of the Following Statements Is CORRECT

question 8

Multiple Choice

Which of the following statements is CORRECT?

• A) wacc calculations should be based on the before-tax costs of all the individual capital components.
• B) flotation costs associated with issuing new common stock normally reduce the wacc.
• C) if a company's tax rate increases, then, all else equal, its weighted average cost of capital will decline.
• D) an increase in the risk-free rate will normally lower the marginal costs of both debt and equity financing.
• E) a change in a company's target capital structure cannot affect its wacc.

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Definitions:

Protein

is an essential nutrient made of amino acids, critical for the building, maintenance, and repair of tissues in the body.

Zygote

The initial cell formed when two gamete cells (e.g., sperm and egg) are joined by means of sexual reproduction. It represents the earliest stage of development in many organisms.

Reflexes

Automatic responses to specific stimuli that do not require conscious thought, demonstrating the body's inherent ability to protect and organize itself.