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The cost of equity and debt will decrease

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Reference no: EM131947227

1. (TRUE or FALSE?) If market interest rates rise then both the cost of equity and debt will decrease.

2. (TRUE or FALSE?) On average the firm must earn at least its WACC (= ka) on projects of average risk in order to just maintain the value of the firm at a constant level.

3. (TRUE or FALSE?) The cost of debt is always less than the cost of equity for a given firm.

Reference no: EM131947227

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