Asked by Kenny Wayne on Jul 04, 2024
Verified
The weighted average cost of capital for a firm is dependent upon the firm's debt-equity ratio.
Debt-Equity Ratio
The quotient of total liabilities and shareholders' equity, representing a company's leverage financially.
- Familiarize with the aspects that determine a business's weighted average cost of capital (WACC).
- Gain insight into the link between strategies for financing a business and its capital cost.
Verified Answer
ZK
Zybrea KnightJul 07, 2024
Final Answer :
True
Explanation :
The weighted average cost of capital (WACC) takes into account the cost of equity and the cost of debt, both of which are influenced by the firm's debt-equity ratio, as it reflects the relative proportions of debt and equity financing.
Learning Objectives
- Familiarize with the aspects that determine a business's weighted average cost of capital (WACC).
- Gain insight into the link between strategies for financing a business and its capital cost.