Question
Suppose the debt ratio (Debt to total assets) is 30%, the current cost of debt is 8%, the current cost of equity is 15%, and
Suppose the debt ratio (Debt to total assets) is 30%, the current cost of debt is 8%, the current cost of equity is 15%, and the tax rate is 21%. A decrease in the debt ratio to 25% would decrease the weighted average cost of capital (WACC).
a. True
b. False
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Cost Benefit Analysis
Authors: Harry F. Campbell, Richard P.C. Brown
3rd Edition
1032320753, 9781032320755
