# All else constant. an increase in a firm’s cost of debt:

All else constant, an increase in a firm’s cost of debt: Multiple Choice could be caused by an increase in the firm’s tax rate. o will result in an increase in the firm’s cost of capital. will lower the firm’s weighted average cost of capital. O will lower the firm’s cost of equity. will increase the firm’s capital structure weight of debt. O

All else constant, an increase in a firm’s cost of
debt:
Option”will result in an increase in the firm’s cost of
capital. ” is Correct
Explantion :
Firm cost of capital = Cost of Equity ×
Weight of Equity + Cost of Debt ( 1 – Tax Rate ) × Weight of
debt
When Cost of debt increases , total cost of debt will be
Incresed by which total cost of capital will Incresed too.
Other Option Explantion :
Could be caused by an increase in the firm’s tax rate.
(False). could be caused by an Decrese in the firm’s tax
rate.
will lower the firm’s weighted average cost of
capital.(False ) : will Incresed the firm’s weighted average cost
of capital
will lower the firm’s cost of equity.(False) : will
increase the firm’s cost of equity.
will increase the firm’s capital structure weight of
debt.(False) :will remained the firm’s capital structure weight of
debt

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