Which of the following statements about the marginal cost of capital is correct? Assume everything else is equal.
A) An increase in the tax rate will decrease a firm's marginal cost of debt.
B) An increase in a company's stock price will increase its marginal cost of debt.
C) An increase in a company's stock price will increase its marginal cost of issuing new common equity.
D) An increase in the total capital raised during a particular period will decrease a firm's marginal cost of debt.
E) A decrease in the weighted cost of capital (WACC) will decrease a firm's marginal cost of retained earnings.
Correct Answer:
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