Which of the following statements is most correct a

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46.Which of the following statements is most correct?a.An increase in the corporate tax rate would lower the weighted average cost of capital foran average firm, other things held constant.b.Depreciation-generated funds have a cost equal to the firm's lowest WACC, and hencethey have no impact on the MCC schedule.c.As a firm's debt ratio approaches 100 percent, the after-tax cost of debt, kdT, at its lowestlevel.d.Statements a, b, and c are all true.e.Statements a, b, and c are all false.
47.Typically, according to the text, the MCC schedule is either horizontal or rising, which implies that the cost ofcapital to a firm increases as it raises larger and larger amounts of capital. The rising section of MCC schedule
48.Which of the following statements is correct?
Chapter 8DThe Cost of Capital24349.In applying the CAPM to estimate the cost of equity capital, which of the following elements is notsubject todispute or controversy?...
50.Which of the following statements is correct?a.The cost of capital used to evaluate a project should be the cost of the specific type offinancing used to fund that project.b.The cost of debt used to calculate the weighted average cost of capital is based on anaverage of the cost of debt already issued by the firm and the cost of new debt.c.One problem with the CAPM approach to estimating the cost of equity capital is that if afirm's stockholders are, in fact, not well diversified, beta might be a poor measure of thefirm's true investment risk.d.The bond-yield-plus-risk-premium approach is the most sophisticated and objectivemethod of estimating a firm's cost of equity capital.e.The cost of equity capital is generally easier to measure than the cost of debt, which variesdaily with interest rates, or the cost of preferred stock which is issued infrequently.

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Term
Three
Professor
DUSA
Tags
Finance, Cost Of Capital, Net Present Value, Dividend yield, Weighted average cost of capital

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