Question: When corporate taxes are considered, how does leverage affect the WACC? increased leverage will decrease the WACC. increased leverage will increase the WACC. changes in

When corporate taxes are considered, how does leverage affect the WACC?

  • increased leverage will decrease the WACC.
  • increased leverage will increase the WACC.
  • changes in leverage will affect the WACC only if the interest rate on debt changes.
  • an increase in leverage will be offset by a decrease in equity financing, thus leaving WACC unchanged.

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