Which of the following statements is FALSE?
A)With no debt,the WACC is equal to the unlevered equity cost of capital.
B)With perfect capital markets,a firm's WACC is dependent of its capital structure and is equal to its equity cost of capital only if the firm is unlevered.
C)As the firm borrows at the low cost of capital for debt,its equity cost of capital rises,but the net effect is that the firm's WACC is unchanged.
D)Although debt has a lower cost of capital than equity,leverage does not lower a firm's WACC.

Question

Quizplus · Accepted Answer

The Answer of Which of the following statements is FALSE?
A)With no debt,the WACC is equal to the unlevered equity cost of capital.
B)With perfect capital markets,a firm's WACC is dependent of its capital structure and is equal to its equity cost of capital only if the firm is unlevered.
C)As the firm borrows at the low cost of capital for debt,its equity cost of capital rises,but the net effect is that the firm's WACC is unchanged.
D)Although debt has a lower cost of capital than equity,leverage does not lower a firm's WACC.

Which of the Following Statements Is FALSE