Which of the Following Is Generally Unnecessary in Measuring the Cost

question 55

Multiple Choice

Which of the following is generally unnecessary in measuring the cost of debt?

• A) a forecast of future interest rates
• B) the proportions of the various classes of debt a firm proposes to use
• C) the corporate income tax rate
• D) All of the above are necessary for measuring the cost of debt.

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Definitions:

Consolidated Income Tax Return

A single income tax return filed by a parent company and its subsidiaries, considered as one entity for tax purposes.

Intra-entity Transfers

Transfers of goods, services, or assets between divisions or units within the same company.

Voting Stock

Shares that give the shareholder the right to vote on matters of corporate policy and the election of the board of directors.

Foreign Corporation

A company that is incorporated under the laws of a country different from the country of its primary operations.