Author Question: If external financing needed cannot be obtained due to poor market conditions, a firm could reduce ... (Read 197 times)

lb_gilbert · **on:** Jul 10, 2018

If external financing needed cannot be obtained due to poor market conditions, a firm could reduce
the amount needed by increasing its retention ratio.

Indicate whether the statement is true or false

Question 2

WineCellars Inc currently has a weighted average cost of capital of 12. WineCellars has been
growing rapidly over the past several years, selling common stock in each year to finance its
growth.

However, due to difficult economic times this year, WineCellars decides to cut its dividend
and increase its retained earnings so that the common equity portion of its capital structure will
include only retained earnings and no new common stock will be sold. WineCellars' weighted
average cost of capital this year should be
A) equal to 12. B) greater than 12.
C) zero, since no new stock will be sold. D) less than 12.

dlook33 · **Reply #1 on:** Jul 10, 2018

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Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.

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