Which of the Following Statements Is CORRECT

question 39

Multiple Choice

Which of the following statements is CORRECT?

• A) The after-tax cost of debt usually exceeds the after-tax cost of equity.
• B) For a given firm,the after-tax cost of debt is always more expensive than the after-tax cost of non-convertible preferred stock.
• C) Retained earnings that were generated in the past and are reported on the firm's balance sheet are available to finance the firm's capital budget during the coming year.
• D) The WACC that should be used in capital budgeting is the firm's marginal,after-tax cost of capital.
• E) The WACC is calculated using before-tax costs for all components.

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Definitions:

Id

In psychoanalytic theory, the part of the mind in which innate instinctive impulses and primary processes are manifest.

Superego

In psychoanalytic theory, the part of a person's mind that acts as a self-critical conscience, reflecting social standards learned from parents and environment.

Moral Component

Aspects of behavior, thought, and emotion concerning ethics, values, and principles of right and wrong.

Psychodynamic Theories

A group of theories in psychology that emphasize the influence of the unconscious mind on behavior and are based on the ideas of Sigmund Freud.