Which of the Following Statements Is CORRECT

question 58

Multiple Choice

Which of the following statements is CORRECT?

• A) A change in a company's target capital structure cannot affect its WACC.
• B) WACC calculations should be based on the before-tax costs of all the individual capital components.
• C) Flotation costs associated with issuing new common stock normally reduce the WACC.
• D) If a company's tax rate increases,then,all else equal,its weighted average cost of capital will decline.
• E) An increase in the risk-free rate will normally lower the marginal costs of both debt and equity financing.

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Definitions:

Reasonableness Standard

A legal criterion used to assess whether an individual's actions under specific circumstances were logical and fair.

Excessive Force

The use of force greater than what is necessary under the circumstances by law enforcement personnel, often a subject of legal and ethical debate.

U.S. Supreme Court

The highest federal court in the United States, holding ultimate appellate jurisdiction over all federal and state court cases that involve a point of federal law.

Deadly Force

The use of physical force that is likely to cause death or serious bodily harm, often discussed in the context of law enforcement.