The initial impact of increasing the use of debt is to:
A)lower the cost of capital
B)lower the weight of the debt component
C)increase the cost of capital
D)lower the cost of retained earnings

Question

Quizplus · Accepted Answer

Increasing the use of debt typically lowers the overall cost of capital initially because debt is often cheaper than equity due to tax deductibility of interest payments.

The Initial Impact of Increasing the Use of Debt Is