Which of the following statements is most correct?
A)An increase in the corporate tax rate would lower the weighted average cost of capital for an average firm, other things held constant.
B)Depreciation-generated funds have a cost equal to the firm's lowest WACC, and hence they have no impact on the MCC schedule.
C)As a firm's debt ratio approaches 100 percent, the after-tax cost of debt, rdT, at its lowest level.
D)Statements a, b, and c are all true.
E)Statements a, b, and c are all false.

Question

Quizplus · Accepted Answer

The Answer of Which of the following statements is most correct?
A)An increase in the corporate tax rate would lower the weighted average cost of capital for an average firm, other things held constant.
B)Depreciation-generated funds have a cost equal to the firm's lowest WACC, and hence they have no impact on the MCC schedule.
C)As a firm's debt ratio approaches 100 percent, the after-tax cost of debt, rdT, at its lowest level.
D)Statements a, b, and c are all true.
E)Statements a, b, and c are all false.

Which of the Following Statements Is Most Correct