A change in the company's capital structure will change the amount of taxes paid but will not change the WACC.
FALSE

Question

Quizplus · Accepted Answer

A change in the company's capital structure can affect both the cost of debt and the cost of equity, which will in turn affect the weighted average cost of capital (WACC). A change in WACC can have an impact on the company's tax liability. For example, if a company raises more debt capital in its capital structure, it can deduct interest payments on its taxes, leading to a reduction in its tax liability. Therefore, a change in the company's capital structure can affect its taxes and WACC.

A Change in the Company's Capital Structure Will Change the Amount