Which of the following is incorrect?
A) The after-tax cost of debt for a firm with losses is equal to the interest rate on the debt.
B) Most debt is placed privately and thus there is no flotation cost.
C) Flotation costs for preferred stock are higher than for debt.
D) Firms always pay dividends on their common stock issues because of the ease with which common shareholders can assume control of the firm.
Correct Answer:
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