Which of the Following Is NOT True Regarding a fiRm's

question 10

Multiple Choice

Which of the following is NOT true regarding a firm's cost of debt?

• A) The cost of debt must be adjusted due to the tax deductibility of interest expense.
• B) The firm's cost of debt based on its past borrowing is known as its embedded debt cost.
• C) The firm's cost of debt is generally lower than the firm's cost of equity.
• D) The coupon rate on outstanding debt is not necessarily the firm's current cost of debt.
• E) A firm's cost of equity is generally easier to calculate than a firm's cost of debt.

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