Which one of the following changes would tend to increase the WACC for a traditional firm?

Name: Which one of the following changes would tend to increase the WACC for a traditional firm?
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Decreasing the proportion of debt financing would tend to decrease the WACC because it reduces the cost of debt, which is typically lower than the cost of equity. Therefore, the correct answer is C. Choices A, B, and D would tend to decrease the WACC because they reduce the cost of capital in some way.

Which One of the Following Changes Would Tend to Increase