Which of the Following Statements Is TRUE

question 54

Multiple Choice

Which of the following statements is TRUE?

• A)The after-tax cost of debt is less than the before-tax cost of debt for a corporation with a tax rate greater than 0.00%.
• B)The after-tax cost of preferred shares is less than the before-tax cost of preferred shares for a corporation with a tax rate greater than 0.00%.
• C)The after-tax cost of equity is less than the before-tax cost of equity for a corporation with a tax rate greater than 0.00%.
• D)None of the above are true.

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Definitions:

World Price

The international market price of a good or service, influenced by global supply and demand.

Domestic Demand

The aggregate need for products and services inside a nation.

Supply Curves

Graphical representations showing the relationship between the price of a good and the quantity of that good a seller is willing to supply.

World Price

The international market price of a good or service, determined by the global supply and demand forces.