Quiz Ch 10 – T/F Debt Cost and Weighted Average Cost of Capital
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
True or false: Typically, the cost of debt, rd, is lower than rs, making rd(1 – T) considerably smaller than rs. Consequently, unless the company is fully financed by debt, the weighted average cost of capital (WACC) generally surpasses rd(1 – T).