Which of the following statements about the cost of capital is CORRECT ? Select one:

a. Both the cost of debt and equity financing will decrease when a nuclear plant company encounters a ban on nuclear power generation in certain states.

b. Both the cost of debt and equity financing will decrease when a firm increases its debt/asset ratio.

c. Both the cost of debt and equity financing will decrease when a firm expands into a risky new area.

d. Both the cost of debt and equity financing will increase when the Federal Reserve tightens credit.

e. The WACC of a firm will decrease when investors become more risk averse.

Answer rating: 100% (QA)

Wacc is the weighted average cost of capital Wacc debtcost of debt1tax equitycost of equity a False ... View the full answer