Increased use of debt, is likely to ________ of the firm provided that the cost of equity remains unaffected. Option 1: Higher the over-all cost of capital Option 2: Lower the over-all cost of capital Option 3: Have no effect on the over-all cost of capital Option 4: Lower the over-all investment of capital

The answer is 'Lower the over-all cost of capital'. View full solution:

CUET Business Studies - Increased use of debt, is likely to ________ of the firm provided that the cost of equity remains unaffected. | PYQs + Solutions

CUET Business Studies 2026 24th May Shift 1

Business Studies

Easy

Higher the over-all cost of capital

Lower the over-all cost of capital

Have no effect on the over-all cost of capital

Lower the over-all investment of capital

✅ Correct Option: 2

Related questions:

3 June Shift 1

Match List-I with List-II

List-I	List-II
Concept	Equation
(A) Financial Leverage	(I) (Profit after tax+depreciation+interest+non cash expenses)/ (pref dividend+interest+repayment obligation)
(B) Net Working Capital	(II) Debt/Equity
(C) Interest Coverage Ratio	(III) Current Assets - Current Liabilities
(D) Debt service coverage ratio	(IV) EBIT/Interest

Choose the correct answer from the options given below:

31 May Shift 1

Which of the following is not a factor affecting the important decision being discussed in the passage above?

14 May Shift 2

Which of the following is NOT a factor affecting working capital requirements?