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Which of these sentences of corporate finance are true and false? 10. The relationship between WAC: and investors' required rate: of return of return M
Which of these sentences of corporate finance are true and false?
10. The relationship between WAC: and investors' required rate: of return of return M 113 a The required rate of return of an investor is the rate of return that an investor demands to purchase a firm's stocks or bonds and thus provide funds for capital investment. Therefore. required returns from the investors\" point of view eorrespond to the required returns or the weighted average cost of capital {WACC} from the firm's point of view. Indicate in the following table whether each of the statements about WACC and the required rates of return of investors is true or false. Statement The firm's cost of debt is what an investor is willing to pay for the firm's bonds before oonsidering the eost of issuing the debt. A firm will increase in value if it invests in projects based on a WACC that is lower than the investors' required rate of return. The eost of retained earnings is the same as the cost of internal {common} equity. Flotation oosts increase the eost of newly.r issued stock compared to the cost of the firm's existing, or already-lr outstanding. common stock or retained earnings. F ash Plove' MAC 25.0.0.127 Q] 3.31.1 E: 20-34-2016 Aplia. All "ghts 'eEervEd. . {Li} 2013 ICen gage Lea 'ning except as nc-tec. All r'g hts reserved. Era le it How Save 8' ContlnueStep by Step Solution
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