When Estimating an Average Corporate After-Tax Cost of Capital, the Component

question 34

True/False

When estimating an average corporate after-tax cost of capital, the component cost of equity is multiplied by (1-t) to allow for the tax-deductibility of dividend payments.

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Definitions:

Public Markets

Marketplaces that are open to the public where securities, commodities, and other financial instruments are traded.

Market Value

The contemporary pricing for transactions involving assets or services on the market.

Stock Split

A corporate action that increases the number of a company's outstanding shares by issuing more shares to current shareholders, thus reducing the price of each share.

Shares

Units of ownership interest in a corporation or financial asset that provide for an equal distribution in any profits, if any are declared, in the form of dividends.