Which of the Following Regarding the Weighted-Average Cost of Capital

question 32

Multiple Choice

Which of the following regarding the weighted-average cost of capital is true?

• A) The tax effect of preferred stock dividends should be included in the calculation of weighted-average cost of capital.
• B) The tax effect of common stock dividends should be included in the calculation of weighted-average cost of capital.
• C) The tax effect of debt should be included in the calculation of the weighted-average cost of capital.
• D) Taxes do not affect the weighted-average cost of capital.

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Definitions:

Test Statistic

A calculated value from sample data used to decide whether to reject the null hypothesis in the context of a hypothesis test.

Normal Distribution

It is a probability distribution that features a symmetric alignment around the mean, emphasizing that data around the mean occur more than data at a distance.

Degrees of Freedom

The count of separate values or amounts that are capable of changing in an analysis while still respecting all limitations.

T-test

A statistical method employed to ascertain whether there's a notable disparity between the averages of two sets.