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Author Question: Suppose the debt ratio (D/TA) is 20%, the current cost of debt is 7%, the current cost of equity is ... (Read 150 times)

Tiffanyanne824

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on: Aug 7, 2023

Question 1

Preferred dividends are not tax deductible. So, the company bears their full cost, and no tax adjustment is used when calculating the cost of preferred stock.

◦ true
◦ false

Question 2

Suppose the debt ratio (D/TA) is 20%, the current cost of debt is 7%, the current cost of equity is 15%, and the tax rate is 35%. An increase in the debt ratio to 70% would have to decrease the WACC.

◦ true
◦ false
Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by Tiffanyanne824 on Aug 7, 2023

Tester

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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Tiffanyanne824

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Reply 2 on: Aug 7, 2023
YES! Correct, THANKS for helping me on my review

gcook

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Reply 3 on: Yesterday
Excellent

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