Since debt financing is cheaper than equity financing

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Reference no: EM131361756

Which of the following statements 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) Increasing a company's debt ratio will typically increase the marginal cost of both debt and equity financing. However, this action still may lower the company's WACC

D) Since a firm's beta coefficient it not affected by its use of financial leverage, leverage does not affect the cost of equity.

Reference no: EM131361756

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