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A Firm's Marginal Cost of Capital

Question 12

Multiple Choice

A firm's marginal cost of capital:


A) is the amount by which the firm's total cost of financing will increase if it raises an additional amount of capital to finance a project.
B) is the amount by which the firm's total cost of equity will decrease if it raises an additional amount of debt to acquire a firm.
C) is the amount by which a project's profit will increase if it raises an additional amount of capital to finance the project.
D) is the ratio of the percentage change of cost of equity to the percentage change in the debt-to-equity ratio.

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