QUESTION 13

1. Which statement about WACC is true?

   	a.	WACC calculations should be based on the before-tax costs of all the individual capital components.
   	b.	Flotation costs associated with issuing new common stock normally reduce the WACC.
   	c.	A change in a companys target capital structure cannot affect its WACC.
   	d.	If a companys tax rate increases, then, all else equal, its WACC will decline.

1 points

QUESTION 14

1. Suppose a firm uses a single source of capital to fund a project. Which of the following statements is correct?

   	a.	Book values of the funding source should be used in calculating WACC.
   	b.	The average cost of all previously raised capital should be used for evaluation.
   	c.	This project should still be evaluated using the firms WACC.
   	d.	Only the cost of that source should be used to evaluate the project.