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    Principles of Corporate Finance Study Set 5
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    Exam 17: Does Debt Policy Matter
  5. Question
    Since the Expected Rate of Return on Debt Is Less
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Since the Expected Rate of Return on Debt Is Less

Question 80

Question 80

True/False

Since the expected rate of return on debt is less than the expected rate of return on equity, the weighted average cost of capital declines as more debt is issued.

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