Suppose the Debt Ratio (D/TA)is 50%,the Interest Rate on New

question 36

True/False

Suppose the debt ratio (D/TA)is 50%,the interest rate on new debt is 8%,the current cost of equity is 16%,and the tax rate is 40%.An increase in the debt ratio to 60% would decrease the weighted average cost of capital (WACC).