Which of the Following Statements Is Correct

question 13

Multiple Choice

Which of the following statements is correct?

• A) The WACC should include only after-tax component costs.Therefore,the required rates of return (or "market rates")on debt,preferred,and common equity (r_d,r_ps,and r_{s or e})must be adjusted to an after-tax basis before they are used in the WACC equation.
• B) The cost of retained earnings is generally higher than the cost of new common stock.
• C) Preferred stock is riskier to investors than is debt.Therefore,if someone told you that the market rates showed r_d > r_ps for a given company,that person must have made a mistake.
• D) When the MCC schedule is developed,the first break point always occurs as a result of using up retained earnings.
• E) If a company with a debt-to-assets ratio of 50 percent were suddenly exempted from all future income taxes,then,all other things held constant,this would cause its WACC to increase.

Evaluate the performance measures of queuing systems.

Apply the knowledge of queuing theory to optimize operational efficiency in various service settings.

Understand the basic principles of sensory thresholds, including the difference and absolute thresholds.

Comprehend the concept of synesthesia and its characteristics.

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Definitions:

Stockholders' Approval

Stockholders' approval is the consent given by shareholders for certain business decisions or corporate actions, typically during a vote at a shareholders' meeting.

Financial Accounting Standards Board

An independent organization responsible for establishing accounting and financial reporting standards for companies and non-profit organizations in the United States.

Assets and Liabilities

Assets are resources owned by a business that have economic value, while liabilities are obligations a business owes to others.

Owner's Equity

The owner's residual interest in the assets of the business after deducting liabilities.