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Author Question: Which of the following statements is correct? (Read 45 times)

sbegs

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on: Aug 7, 2023
Which of the following statements is correct?

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Higher flotation costs reduce investors’ expected returns, and that leads to a reduction in a company’s WACC.


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When calculating the cost of preferred stock companies don’t need to adjust for taxes, because dividends paid on preferred stock are not tax deductible by the paying corporation.


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When calculating the cost of debt a company doesn’t need to adjust for taxes, because interest payments are not deductible by the paying corporation.


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If a company’s beta increases, this will increase the cost of equity used to calculate the WACC, but only if the company does not have enough retained earnings to take care of its equity financing and hence needs to issue new stock.

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

ekattan2

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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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sbegs

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Reply 2 on: Aug 7, 2023
Great answer, keep it coming :)

kthug

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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