Question
Which of the following statements about the cost of capital is INCORRECT ? Select one: a.Both the cost of debt and equity financing will increase
Which of the following statements about the cost of capital is INCORRECT ?
Select one:
a.Both the cost of debt and equity financing will increase when the Federal Reserve tightens credit.
b.Both the cost of debt and equity financing will increase when a company merges with another firm whose earnings are counter-cyclical both to those of the first firm and those to the stock market.
c.Both the cost of debt and equity financing will increase when a firm increases its debt/asset ratio.
d.The WACC of a firm will increase when investors become more risk averse.
e.If a company's tax rate increases, then, all else equal, its weighted average cost of capital will decrease.
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