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.
Ans: 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.
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In time-and-material pricing, a material loading charge covers all of the following except
a) purchasing costs. b) related overhead. c) desired profit margin. d) all of these are covered.
Jill agrees to sell Jason a three bedroom ranch. Per the sales agreement, Jill deposited the deed to the ranch in escrow. Subsequently, Jill dies. The ranch will most likely:
a. pass to Jill's heirs provided she left a valid will b. pass to the state because the escrow terminates c. pass to Jason, provided he satisfies the terms of the sales agreement d. pass to Jason if he is an heir of Jill's