The implicit cost of debt takes into consideration the change in the cost of common equity brought on by using additional debt.

Name: The implicit cost of debt takes into consideration the change in the cost of common equity brought on by using additional debt.
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Question

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The statement is true. The use of debt can affect the cost of common equity due to increased financial risk, which must be considered as an implicit cost of using debt financing.

The Implicit Cost of Debt Takes into Consideration the Change