Question: I need help with problems 29 and 30. Thank You! @ e. Greater than $23.00 Question 29 Which of the following is CORRECT? Not yet
@ e. Greater than $23.00 Question 29 Which of the following is CORRECT? Not yet answered Select one: Points out of 1 Flag question a. When calculating the cost of debt, a company needs to adjust for taxes, because interest payments are deductible by the paying corporation b. When calculating the cost of preferred stock, companies must adjust for taxes, because dividends paid on preferred stock are deductible by the paying corporation. c. Because of tax effects, an increase in the risk free rate will have a greater effect on the after-tax cost of common stock as measured by the CAPM. d. Higher flotation costs reduce investors' expected returns, and that leads to a reduction in a company's WACC. e. All of the above are correct. Question 30 Not yet answered Points out of 1 P Flag question The ROP corporation is looking to reduce their cost of capital. In calculating the return on equity for the firm, the firm uses CAPM. Which of the following events would reduce the firm's weighted average cost of capital? Select one: a. The fim decides to issue a large amount of debt to take advantage of the cheaper cost of debt versus equity b. The firm sees a dramatic increase in beta C. Inflation rates increase d. The market risk premium decreases e. None of the above conditions will cause the firm's weighted average cost of capital to decrease 3 8:12 AM 12/12
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