Question: If a negative EFN (External Financing Needed, aka AFN) is lessening the firms debt because of the ability to pay off existing debt, then it

"If a negative EFN (External Financing Needed, aka AFN) is lessening the firms debt because of the ability to pay off existing debt, then it is also reducing the cost of capital. This means that the firm does not have to use as many funds, as a percent (WACC), in order to operate at a level of at least breaking even. If a firm wants to reduce its WACC it should use its negative EFN to pay off debt."

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