Which of the Following Statements Regarding Calculating a Firm's Cost

question 49

Multiple Choice

Which of the following statements regarding calculating a firm's cost of capital is correct?

• A)The after-tax cost of debt is generally more expensive than the after-tax cost of preference shares.
• B)Since retained earnings are readily available,the cost of retained earnings is generally lower than the cost of debt.
• C)If a company's beta increases,this will increase the cost of capital.
• D)The level of general economic conditions will determine whether a firm should utilise an arithmetic average cost of capital or a weighted average cost of capital.

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Definitions:

Cervical Nerves

The nerves that emerge from the cervical vertebrae in the neck and are involved in motor and sensory functions of the neck, shoulders, arms, and hands.

Sciatic Nerve

The largest and longest nerve in the human body, running from the lower back through the buttocks and down each leg.

Common Fibular

Nerve involved in motor and sensory functions of the lower leg, particularly in the muscles that flex the foot and toes.

Inferior Gluteal

Referring to the nerves or artery that serves the lower portion of the gluteal muscles in the buttocks, involved in the movement of the hip and thigh.