Which of the Following Statements Is Correct

question 69

Multiple Choice

Which of the following statements is correct?

• A) Suppose a firm is losing money and thus,is not paying taxes,and that this situation is expected to persist for a few years whether or not the firm uses debt financing.Then the firm's after-tax cost of debt will equal its before-tax cost of debt.
• B) The component cost of preferred stock is expressed as r_ps(1 − T),because preferred stock dividends are treated as fixed charges,similar to the treatment of debt interest.
• C) The reason that a cost of capital is assigned to retained earnings is because these funds are already earning a return in the business;the reason does not involve the opportunity cost principle.
• D) The bond-yield-plus-risk-premium approach to estimating a firm's cost of common equity involves adding a subjectively determined risk-premium to the market risk-free bond rate.
• E) None of the above is a correct statement.

Appreciate the causes and effects of the Great Depression and how various administrations reacted to economic challenges.

Analyze the evolution and impact of technology and innovation on the U.S. economy, focusing on transportation and agriculture.

Distinguish between the realities versus myths regarding the economic status, employment, and disparities within the U.S. from historical to contemporary times.

Evaluate the effects of policy on economic disparities, focusing on land distribution, farm productivity, and employment.

---

Definitions:

Superstars Pay

Refers to the significantly high salaries or earnings of top performers or individuals in specific industries such as sports, entertainment, and business due to their exceptional skill, talent, or marketability.

Marginal Revenue Productivity

The additional revenue generated by employing one more unit of a given resource or factor of production.

Elastic Product Demand

A situation where the demand for a product is sensitive to changes in price, meaning small price changes can cause large changes in quantity demanded.

Economic Profits

Profits that exceed the opportunity costs of all resources employed by the firm, reflecting earnings above the normal expected return.