The weighted average cost of capital for a firm may be dependent upon the firm's:
I.rate of growth.
II.debt-equity ratio.
III.preferred dividend payment.
IV.retention ratio.

Question

Quizplus · Accepted Answer

The weighted average cost of capital (WACC) is influenced by the firm's rate of growth (which affects future financing needs), debt-equity ratio (which affects the cost of debt and equity), preferred dividend payment (which affects the cost of preferred stock), and retention ratio (which influences the amount of earnings retained and thus the need for external financing).

The Weighted Average Cost of Capital for a Firm May