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Assume that a firm's total dollar capital budget is fixed and will not be changed. Which of the following will increase the retained earnings break point, i.e., increase the dollar amount of total capital at which the WACC will increase due to having to issue new common stock?

A. The firm's net income increases.

B. The firm increases its dividend payout ratio.

C. The firm increases the percentage of equity in its target capital structure.

D. The risk of the average capital budgeting project increases.

E. The risk of the average capital budgeting project decreases.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92172724

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