[Solved] Which one of the following is a correct statement regarding a firm's weighted average cost of capital (WACC)?

Q.	Which one of the following is a correct statement regarding a firm's weighted average cost of capital (WACC)?
A.	An increase in the market risk premium will tend to decrease a firm's WACC.
B.	A reduction in the risk level of a firm will tend to increase the firm's WACC.
C.	A 5 percent increase in a firm's debt-equity ratio will tend to increase the firm's WACC.
D.	The WACC can be used as the required return for all new projects with similar risk to that of the existing firm.
Answer» D. The WACC can be used as the required return for all new projects with similar risk to that of the existing firm.

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