Assume that a company is financed 75% with equity and 25% with debt. A decrease in the corporate tax rate of the firm will cause its weighted average cost of capital (WACC) to:. 1. Rise.
2. Fall.
3. Stay constant
4. More information is needed

1. Rise.

Explanation:

The weighted average cost of capital (WACC) is an evaluation of a firm's cost of capital in which every category of capital is proportionately weighted.

Weighted average cost of capital is computed as:

WACC =( Weightage of Equity x Cost of Equity )+  Weightage of Debt x Cost of Debt x(1- Tax Rate )

A decrease in the corporate tax rate of the firm will cause its weighted average cost of capital (WACC) to rise due to an increase in the cost of debt.

hence, the correct option is 1. Rise.

lbc corporation makes and sells a product called product wz. each unit of product wz requires 4.1 hours of direct labor at the rate of $20.00 per direct labor-hour. management would like you to prepare a direct labor budget for june. the company plans to sell 28,000 units of product wz in june. the finished goods inventories o

government control and resources