9. Which of the following statements is CORRECT? a. There is an \"opportunity co
ID: 2653717 • Letter: 9
Question
9.
Which of the following statements is CORRECT?
a. There is an "opportunity cost" associated with using retained earnings, hence they are not "free." b. The WACC as used in capital budgeting would be simply the after-tax cost of debt if the firm plans to use only debt to finance its capital budget during the coming year. c. The percentage flotation cost associated with issuing new common equity is typically smaller than the flotation cost for new debt. d. The WACC as used in capital budgeting is an estimate of the cost of all the capital a company has raised to acquire its assets. e. The WACC as used in capital budgeting is an estimate of a company's before-tax cost of capitalExplanation / Answer
a. There is an "opportunity cost" associated with using retained earnings, hence they are not "free."
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