Which of the Following Will Increase the Cost of Equity

question 11

Multiple Choice

Which of the following will increase the cost of equity?

• A) The firm's share price falls 10 percent.
• B) The firm is expected to reduce its dividend.
• C) The firm's corporate tax rate increases.
• D) None of the options are correct.

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Definitions:

Technological Feasibility

The point at which a company determines that a new technology can be developed and made into a working product.

Software Development Costs

Expenses incurred in the research, development, design, and testing of software, which may be capitalized or expensed depending upon their nature and the accounting policies followed.

Long-lived Assets

Assets expected to provide economic benefits over a period longer than one year, such as buildings, machinery, and equipment.

Capitalizes Expenditures

The process of recording a cost as an asset, rather than an expense, to be written off over the future period.