As the Debt-To-Assets Ratio Rises,the WACC Is Reduced Because the After-Tax

question 65

True/False

As the debt-to-assets ratio rises,the WACC is reduced because the after-tax cost of debt is usually lower than the cost of equity.What limits the substitution of debt for equity in the capital structure is that as the debt-to-assets ratio rises,the costs of both components eventually increase.

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Definitions:

Prostaglandins

Potent hormone-like substances that act in exceedingly low doses on target organs. They can be used to treat asthma and gastric hyperacidity.

Central Nervous System

The part of the nervous system consisting of the brain and spinal cord; it is responsible for receiving sensory information and coordinating body responses.

Acute Pain

A type of pain that is intense and lasts for a short period of time, often signaling an injury or illness.

Spinal Surgery

A type of surgery that is focused on treating conditions related to the spine, such as herniated disks or spinal stenosis.