Question: 1. Explain why the following statements are true or false. (a) [5] Personal taxes have an indirect impact on the firm's weighted average cost of

1. Explain why the following statements are true or false. (a)

1. Explain why the following statements are true or false. (a) [5] "Personal taxes have an indirect impact on the firm's weighted average cost of capital, but personal taxes have no direct impact on the WACC. (b) [5] Long-term investors are more heavily taxed on capital gains, so they would prefer dividend payments to share repurchases". (C) [5] All else being equal, if the maturity of debt is longer, agency costs of debt are smaller.

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