11. Problems and Applications Q11 Suppose that each rm in a competitive industnr has the following costs: Total Cost: TE. 5+iq2 Marginal Cost: MC=g
September 3, 2020
Increasing the quantity of money in circulation shifts the:short-run aggregate supply curve to the right .long-run aggregate supply curve to the…
September 3, 2020

Which statement is FALSE regarding WACC and its components?

a)The cost of debt is usually less than the cost of equity.

b)The WACC should be used as the discount rate for all projects that the firm considers.

c)For an all-equity firm, the cost of equity equals the WACC.

d)The WACC may increase if the firm seeks external financing for a project.

Please explain why b) is the correct answer.

KM
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