Two analysts are discussing the costs of external financing sources. The first states that the company’s bonds have a known interest rate but that the interest rate on accounts payable and the interest rate on equity financing are not specified. They are implicitly zero. Upon hearing this, the second analyst advocates financing the firm with greater amounts of accounts payable and common shareholders equity. Is the second analyst correct in his analysis?

A. He is correct in his analysis of accounts payable only.

B. He is correct in his analysis of common equity financing only.

C. He is not correct in his analysis of either accounts payable or equity financing.