Question
A company has a capital structure which consists of 50 percent debt and 50 percent equity. Which of the following statements is most correct? Select
A company has a capital structure which consists of 50 percent debt and 50 percent equity. Which of the following statements is most correct?
Select one: a. The cost of equity financing is always less than the cost of debt financing. b. The cost of equity financing exceeds the WACC. c. The WACC is calculated on a before-tax basis. d. The WACC represents the cost of capital based on historical averages. In that sense, it does not represent the marginal cost of capital. e. The cost of retained earnings exceeds the cost of issuing new common stock.
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