Which of the Following Statements Is CORRECT

question 61

Multiple Choice

Which of the following statements is CORRECT?

• A) Since debt financing is cheaper than equity financing, raising a company's debt ratio will always reduce its WACC.
• B) Increasing a company's debt ratio will typically reduce the marginal cost of both debt and equity financing.However, this action still may raise the company's WACC.
• C) Increasing a company's debt ratio will typically increase the marginal cost of both debt and equity financing.However, this action still may lower the company's WACC.
• D) Since a firm's beta coefficient it not affected by its use of financial leverage, leverage does not affect the cost of equity.
• E) Since debt financing raises the firm's financial risk, increasing a company's debt ratio will always increase its WACC.

Record owner's withdrawals and investments in the business.

Calculate the ending balance of cash and other accounts based on given transactions.

Recognize and correct common accounting errors and their impact on financial statements.

Understand the role and structure of the chart of accounts.