Which One of the Following Is a Correct Statement Regarding

question 21

Multiple Choice

Which one of the following is a correct statement regarding a firm's weighted average cost of capital (WACC) ?

• A)The WACC will decrease when the tax rate decreases for all firms that utilise debt financing.
• B)A reduction in the risk level of a firm will tend to increase the firm's WACC.
• C)A 5 per cent increase in a firm's debt-equity ratio will tend to increase the firm's WACC.
• D)The WACC can be used as the required return for all new projects with similar risk to that of the existing firm.
• E)An increase in the market risk premium will tend to decrease a firm's WACC.

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Definitions:

Agent Self

A concept in psychology that refers to the aspect of an individual’s self-concept that is involved in making decisions and taking actions.

Interdependent Self-Construal

A concept of oneself that is closely linked with and defined by relationships with others, emphasizing connectedness and social context.

Interpersonal Self

The aspect of an individual's self-concept that is formed in relation to their social environments and interactions with others.

Public Self

An aspect of an individual's self-concept that is concerned with how they are seen by others and is shaped by social interactions and public roles.