Which of the following is NOT true regarding a firm's cost of debt?
A) The cost of debt must be adjusted due to the tax deductibility of interest expense.
B) The firm's cost of debt based on its past borrowing is known as its embedded debt cost.
C) The firm's cost of debt is generally lower than the firm's cost of equity.
D) The coupon rate on outstanding debt is not necessarily the firm's current cost of debt.
E) A firm's cost of equity is generally easier to calculate than a firm's cost of debt.
Correct Answer:
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