Which of the following statements about marginal cost of capital is true? marginal cost of capital...
Which of the following statements about marginal cost of capital is true?
marginal cost of capital in real world is determined by the cost of capital of debt and equity
Marginal and average costs of capitals of claims are the same in an imperfect market.
Managers don't care about marginal cost of capital
The presence of nonfinancial liabilities will affect marginal cost of capital
Homework Answers
Select - Option - A ...........
Marginal cost of capital in real world is determined by the cost of capital of debt and equity
Explanation
Marginal means ..... additional. As such, additional cost of equity or debt is dependent on what is current equity or debt. To put in simple words, if current capital structure had high debt, further debt raising ( means marginal cost of debt ) will also be further higher.
Add Answer to:
Which of the following statements about marginal cost of capital
is true?
marginal cost of capital...
Which of the following statements is TRUE when estimating cost of capital? a) The cost of...
Which of the following statements is TRUE when estimating cost of capital? a) The cost of debt should be based on the coupon rate of current debt. b) The cost of equity capital should be based on the historical average cost of equity. c) Use either target capital structure weights or market value capital structure weights to estimate the WACC. d) All of the above are true.
Which of the following statements about capital structure and the WACC is CORRECT? A. Since debt...
Which of the following statements about capital structure and the WACC is CORRECT? A. Since debt financing is cheaper than equity financing, raising a company’s debt ratio will always reduce its WACC. B. Increasing a company’s debt ratio will typically reduce the marginal cost of both debt and equity financing. However, this action still may raise the company’s WACC. C. Since debt financing raises the firm's financial risk, increasing a company’s debt ratio will always increase its WACC. D. Increasing...
All of the following statements are true about marginal cost except I. marginal cost increases as...
All of the following statements are true about marginal cost except I. marginal cost increases as production expands. II. when marginal cost is below average cost, average cost is falling. III. when marginal cost is above average cost, average cost is constant. IV. when marginal cost meets the average total cost, the average total cost is at its minimum point. II and III I only II only III only III and IV IV only Which of the following is an...
Which of the following statements are true for a competitive market in which all firms have...
Which of the following statements are true for a competitive market in which all firms have upward-sloping marginal cost curves? A) If more firms enter the market, the market price will fall, and so will profits. TRUE B) The marginal cost is always equal to price. TRUE C) The average cost is always equal to the price. FALSE why is B true?? Is it only true in perfectly competitive market? I don't see why it is possible in other types...
Which of these statements (or sets of statements) are true about the equity beta? A. It...
Which of these statements (or sets of statements) are true about the equity beta? A. It is a measure of systematic risk. B. It measures both systematic financial and systematic business risk. C. Increasing debt in the capital structure increases the equity beta. D. A, B, and C are all true E. Only A and B
Quiz name Which of the following statements about inventory are TRUE? The most important cost arising...
Quiz name Which of the following statements about inventory are TRUE? The most important cost arising from inventory is usually the holding cost Increasing inventory leads to a decline in net working capital The cost of financing the inventory is usually significantly larger than the holding cost Inventory levels are determined as the trade-off between losing the margin on additional sales and the costs of excess inventory
Which of the following statements is true about the factors that affect pricing decisions? Select one:...
Which of the following statements is true about the factors that affect pricing decisions? Select one: a. Information about competitors' technologies is not useful for pricing decisions. b. Information about a competitor in a perfect market affects pricing decisions. c. Increase in price of a substitute product does not affect pricing decisions. d. Managers must always be aware of the competition when pricing their products
Which of the following should be true about the cost of equity capital? Re unlevered >...
Which of the following should be true about the cost of equity capital? Re unlevered > Re levered Re unlevered < Re levered Re unlevered = Re levered Part 2: Which of the following is a side effect to financing? The cost of issuing new securities Financial distress The tax subsidy to debt All of the above
Which of the following statements is false in a Modigliani-Miller world? A. Capital structure does not...
Which of the following statements is false in a Modigliani-Miller world? A. Capital structure does not affect the cost of capital B. Higher leverage increase the cost of equity C. Higher leverage does not affect the WACC D. Higher leverage does not affect the cost of equity Which of the following is not an advantage of having large shareholders? A. Better coordination in monitoring management B. Executives more likely to be dismissed when underperforming C. Less shareholders' interference in the...
24) Which of the statements below is TRUE regarding CAPITAL STRUCTURE? A) Capital structure deals with...
24) Which of the statements below is TRUE regarding CAPITAL STRUCTURE? A) Capital structure deals with the liability-side of the balance sheet. B) According to the Static Theory of Capital Structure, the optimal capital structure is the one at which the company's weighted average cost of capital ("WACC") is at a maximum. C) Adding debt to the capital structure will always make shareholders worse off. D) Financial leverage is the degree to which a firm utilizes equity financing.
Quiz name Which of the following statements about inventory are TRUE? The most important cost arising from inventory is usually the holding cost Increasing inventory leads to a decline in net working capital The cost of financing the inventory is usually significantly larger than the holding cost Inventory levels are determined as the trade-off between losing the margin on additional sales and the costs of excess inventory
24) Which of the statements below is TRUE regarding CAPITAL STRUCTURE? A) Capital structure deals with the liability-side of the balance sheet. B) According to the Static Theory of Capital Structure, the optimal capital structure is the one at which the company's weighted average cost of capital ("WACC") is at a maximum. C) Adding debt to the capital structure will always make shareholders worse off. D) Financial leverage is the degree to which a firm utilizes equity financing.
Most questions answered within 3 hours.
-
What specific indicators can point to lack of progress for
African Americans in American society?
asked 38 minutes ago -
1-The Electrons in a beam are moving at 2.7×108 m/s in an
electric field of 15000...
asked 54 minutes ago -
A gas tank is a vertical cylinder. It has a radius of 1m, a
height of...
asked 1 hour ago -
Accent Software faces the following conditions. All of these
support Accent’s use of a market-penetration pricing...
asked 2 hours ago -
A mathematically inclined friend emails you the following
instructions: "Meet me in the cafeteria the first...
asked 2 hours ago -
A monopoly sells in two countries . The demand curves in the two
countries are p1...
asked 3 hours ago -
A .15kg rubber ball is bounced off a wall. Before hitting the
wall, the ball moves...
asked 3 hours ago -
A manufacturing company preparing to build a new plant is
considering three potential locations for it....
asked 3 hours ago -
B. If compound Y has approximately the same values of solubility
in toluene as compound X,...
asked 4 hours ago -
Oscar Inc. has inventory in Japan valued at 39,051,000 Yen one
year ago. One year ago...
asked 4 hours ago -
If Canada suffered from "fundamental disequilibrium," and its
government choose not to devalue its currency, a...
asked 5 hours ago -
4. How many input & output Key Value Pairs are passed into,
and emitted out of...
asked 4 hours ago