Which of the following statements is correct?
A. The appropriate tax rate to use in the adjustment of the before-tax cost of debt to determine the after-tax cost of debt is the average tax rate because interest is deductible against the company's entire taxable income.
B. For a given company, the after-tax cost of debt is generally less than both the cost of preferred equity and the cost of common equity.
C. For a given company, the investment opportunity schedule is upward sloping because as a company invests more in capital projects, the returns from investing increase.
Answer: B. For a given company, the after-tax cost of debt is generally less than both the cost of preferred equity and the cost of common equity.
You might also like to view...
The ?rst strategy for a persuasive presentation is to ?nd common ground with your listeners
Indicate whether this statement is true or false.
Which intercultural training approach includes a comparison of values and behaviors of people in the home country and the host country?
a. information or fact-oriented training b. attribution training c. cultural awareness approach d. interaction approach