Which of the following is true regarding the weighted-average co

Which of the following is true regarding the weighted-average cost of capital?

A, The book value of the components of capital should always be used to calculate the weighted-average cost of capital.

B. A company may have two weighted-average costs of capital if the firm's capital structure is so large that new common stock must be sold.

C. The cost of common equity is lower than the cost of retained earnings.

D. The cost of preferred stock is adjusted for the tax deduction associated with preferred dividends.


Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a...