Take Test: Chapter 10 Ass ids 193196 1&course id OFalse QUESTION 4 The cost of preferred stock must be adjusted to an after-tax figure because dividends paid on preferred stock reduce a firm's taxable income they create a tax shield for the firm). O True O False QUESTION 5 You were recently hired to calculate a firm's WACC. The firm's capital structure is 40% debt, 45% common stock, and 15% preferred stock. The AFTER-tax cost of debt is 3.4%, the cost of preferred stock is 6 Enter your answer as a decimal with four places of precision. .8%, and the cost of retained earnings is 8.796. what is the firm's WACC? QUESTION 6 For capital budgeting purposes, the firm should always consider retained earnings as the first source of capital (retained earnings should be used first) since retained earnings have no cost to the firm. ?True O False QUESTION 7