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QUESTION
Which of the following is correct about components ofWACC?
Which of the following is correct about components of WACC?
- There are no flotation costs associated with issuing new debt.
- For mature companies, the book value weights of common stock and debt are very similar to the market value weights of common stock and debt.
- All else being the same, higher corporate tax rate will result in lower WACC.
- One cannot calculate WACC for a company that does not have debt.
- The lower the proportion of debt in a firm's capital structure, the lower its WACC.
