A Firm Has Determined Its Cost of Each Source of Capital

Multiple Choice

A firm has determined its cost of each source of capital and optimal capital structure, which is composed of the following sources and target market value proportions: If the firm were to shift toward a more leveraged capital structure (i.e., a greater percentage of debt in the capital structure) , the weighted average cost of capital would

A) increase.
B) remain unchanged.
C) decrease.
D) not be able to be determined.