Multiple Choice
According to the graph of WACC for Union Pacific, which of the following is (are) true?
A) The cost of equity is an increasing function of the debt-equity ratio.
B) The cost of equity is an increasing function of the debt-equity ratio, and the cost of debt is an increasing function of the debt-equity ratio.
C) The weighted average cost of capital (WACC) is a decreasing function of the debt-equity ratio.
D) The cost of equity is an increasing function of the debt-equity ratio, the cost of debt is an increasing function of the debt-equity ratio, and the weighted average cost of capital (WACC) is a decreasing function of the debt-equity ratio.
Correct Answer:
Verified
Correct Answer:
Verified
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