Which of the Following Statements Is Correct

question 60

Multiple Choice

Which of the following statements is correct?

• A)The weighted average cost of capital is calculated on a before-tax basis.
• B)An increase in the market risk premium is likely to increase the weighted average cost of capital.
• C)The weights of debt and equity should be based on the balance sheet because this is the most accurate assessment of the valuation.
• D)All of these statements are correct.

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Definitions:

Supply Curve

A visual chart that illustrates how the price of an item correlates with the amount of the item that sellers are prepared to offer.

Marginal Cost Curve

A graphical representation showing how the cost of producing one more unit of a good or service changes as production volume increases.

Average Revenue

The amount of income generated per unit of sale or services rendered, calculated by dividing the total revenue by the number of units sold.

Total Revenue

The overall amount of money generated by a firm from selling its products or services, calculated as the quantity of goods sold multiplied by the price of the goods.