A Company Has a Capital Structure That Consists of 50

question 121

Multiple Choice

A company has a capital structure that consists of 50% debt and 50% equity. Which of the following is generally true?

• A) The weighted average cost of capital is less than the cost of equity financing.
• B) The cost of equity financing is greater than the cost of debt financing.
• C) The weighted average cost of capital is calculated on a before-tax basis.
• D) Both A and B.

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