As a firm increases the amount of debt it uses to fund its assets the:Select one:a.WACC will continually decline.b.WACC will continually increase.c.cost of debt can be expected to rise.d.WACC will be unaffected.

If a firm increases the proportion of debt in the capital structure:A.The cost of debt will increase but there will be no impact on the cost of equity.B.The cost of equity and the cost of debt will both increase, but its cost of capital will fall.C.The cost of equity will increase, but the impact on the firm’s cost of capital is unclear in the absence of specific information about financial distress costs and the firm’s tax position.D.The cost of equity will increase but the cost of debt will decrease.

In case the firm is all-equity financed, WACC would be equal to:Options :Cost of debtCost of equityNeither A nor BBoth A and B

How does the level of debt affect the weighted average cost of capital (WACC)?Multiple choice question.The WACC initially rises and then falls as debt increases.The WACC initially falls and then rises as debt increases.The WACC always increases as debt increases.The WACC always falls as debt increases.

Firm value initially increases when the proportion of debt in the capital structure increases due to the Blank______.Multiple choice question.lower dividend paymentsdebt tax shieldhigher dividend paymentslower interest expenses

A company's debt-to-assets ratio can worsen (i.e. increase) if ONE of the following is done:Select one:a. Repurchases Common Stock Outstandingb. Issues more common stockc. Shift long-term to short-term debtd. Shift short-term to long-term debt