The marginal cost of capital MCC schedule generally rises which implies that

Question

The marginal cost of capital (MCC) schedule generally rises, which implies that the weighted average cost of capital:

a. increases as the firm achieves economies of scale in its financing arrangements.

b. decreases as the firm uses more retrained earnings to finance capital budgeting projects.

c. decreases as the firm uses a greater proportion of cheaper debt and a lower proportion of more expensive common stock.

d. increases as the firm pays more taxes on higher levels of taxable income.

e. generally increases because the firm incurs higher flotation costs and higher financial risk as it raises more funds through new debt and new equity issues.

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