Question 7 4 pts One argument to use in applying the cost of capital calculation for Common Stock towards Retained Earnings is The Expectations Hypotheses states what dividends will be worth to stockholders at some point in the future. The interest rate on common stock obligations equals the interest rate on retained earnings. Common Stockholders ultimately have a right to the retained earnings. Retained earnings and common stock both are contractual obligations which, if not paid, can be reasons of investors to force a firm into bankruptch. Question 8 4 pts A major disadvantage of the payback period method is O E. Only answers B and C are correct D. All of the answers are correct. B. Ignores cash flows beyond the payback period. O A. Fairly easy to use and understand O C. Does not directly account for the time value of money