Asked by
Megan Mihalko
on Dec 20, 2024Verified
Which of the following is NOT true regarding the marginal cost of capital (MCC) ?
A) Is a graph of the WACC
B) Breaks when common stock is exhausted
C) Increases due to flotation costs
D) Represents the cost of the next dollar raised
Marginal Cost of Capital
The cost of obtaining one additional dollar of new capital, which reflects the cost of the last unit of capital raised.
Flotation Costs
The total costs that are incurred by a company in offering new securities to the public, including underwriting, legal, and registration fees.
WACC
Weighted Average Cost of Capital, a calculation that reflects the average rate of return a company is expected to pay its security holders.
- Discuss the aspects that modify the Weighted Average Cost of Capital (WACC).
Verified Answer
WM
Learning Objectives
- Discuss the aspects that modify the Weighted Average Cost of Capital (WACC).