A company is considering a new plan for its capital structure. Which of the following is true if, under the new lan, the company's weighted average cost of apital exceeds the expected return? The company's value will increase. The company's proposed capital structure may put it at risk for bankruptcy. The company is over-leveraged. The company's cost of capital is still at a comfortable level.
A company is considering a new plan for its capital structure. Which of the following is true if, under the new lan, the company's weighted average cost of apital exceeds the expected return? The company's value will increase. The company's proposed capital structure may put it at risk for bankruptcy. The company is over-leveraged. The company's cost of capital is still at a comfortable level.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 37P
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Question
![A company is considering a new plan for its
capital structure.
Which of the following is true if, under the new
plan, the company's weighted average cost of
capital exceeds the expected return?
The company's value will increase.
The company's proposed capital structure
may put it at risk for bankruptcy.
O The company is over-leveraged.
The company's cost of capital is still at a
comfortable level.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F468cd9f6-2862-4687-8863-d44495af8079%2F44ccc7ff-194d-42db-a4e9-990c791a2862%2Fkfik9d_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A company is considering a new plan for its
capital structure.
Which of the following is true if, under the new
plan, the company's weighted average cost of
capital exceeds the expected return?
The company's value will increase.
The company's proposed capital structure
may put it at risk for bankruptcy.
O The company is over-leveraged.
The company's cost of capital is still at a
comfortable level.
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