Which of the following statements is true of marginal cost of capital??
A. All else equal, an increase in the tax rate would decrease the marginal cost of debt capital.?
B. ?All else equal, an increase in a company's stock price will increase the marginal cost of retained earnings.
C. ?All else equal, an increase in a company's stock price will increase the marginal cost of issuing new common equity.
D. ?All else equal, an increase in the capital raised in a period will decrease the marginal cost of debt capital.
E. ?All else equal, an increase in the weighted cost of capital will decrease the marginal cost of retained capital.
Answer: A
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