The cost of debt, rd, is normally less than rs, so rd(1 - T) will normally be much less than rs. Therefore, as long as the firm is not completely debt financed, the weighted average cost of capital (WACC) will normally be greater than rd(1 - T).
Answer the following statement true (T) or false (F)
True
You might also like to view...
________ is a contractual obligation that requires a company to deliver cash or other financial asset to another party
A) Detachable warrant B) Capital structure C) Financial leverage D) Financial liability
Relevant asset valuations refer to all of the following except:
a. they are timely. b. they have the capacity to affect a user's decisions, based on the information. c. they incorporate all available information. d. they are always subjective.
What are the major external sources of new product ideas? What type of information can be gathered from each of these sources? How do firms benefit from such information?
What will be an ideal response?
Morris Company established a petty cash fund with a $600 balance. Which of the following statements is incorrect?
A) A journal entry is needed to debit the Cash account and credit the Petty Cash account for $600. B) There is no net effect on current assets. C) The sum of the cash plus the total of the petty cash tickets should equal $600 at all times. D) The petty cash custodian cashes a check for $600 and places the currency in the petty cash fund box.