WACC
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All else constant, an increase in a firm's cost of debt:
could be caused by an increase in the firm's tax rate.
will result in an increase in the firm's cost of capital.
will lower the firm's weighted average cost of capital.
will lower the firm's cost of equity.
will increase the firm's capital structure weight of debt
Calculate the weighted average cost of capital for the following firm: it has $200000 in debt, $400000 in common stock and $10000 in preferred stock. It has a 5% cost of debt, 13% cost of common stock, 11% cost of preferred stock and a 32% tax rate.
7.29%
8.65%
9.82%
10.24%
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1. will result in an increase in the firm's cost of capital.
2.
WACC = Proportion ...
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