Question: 9. Based on M & M Theorem II Proposition II with taxes, the weighted average cost of capital: A. is equal to the after-tax cost

9. Based on M & M Theorem II Proposition II with taxes, the weighted average cost of capital: A. is equal to the after-tax cost of debt. B. has a linear relationship with the cost of equity capital. C. is unaffected by the tax rate. D. decreases as the debt-equity ratio increases. 10. Winter's Toyland has a debt-asset ratio of 0.4. The pre-tax cost of debt is 8.7 percent and the required return on assets is 16.1 percent. What is the cost of equity if you ignore taxes? A. 19.31 percent B. 19.74 percent C. 20.91 percent D. 21.06 percent

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