Which is not true about debt financing and the weighted average cost of capital?

Question

Quizplus · Accepted Answer

The statement "No debt in the firm's capital structure will minimize the firm's weighted-average cost of capital" is false. In fact, a small amount of debt can help lower the firm's cost of capital by taking advantage of the tax-deductibility of interest payments. However, as the level of debt increases beyond the optimal capital structure, the cost of capital will increase due to the higher risk perception of the firm.

Which Is Not True About Debt Financing and the Weighted