Tax adjustments to the cost of preferred stock must be made when determining the cost of capital since dividend expenses on preferred stocks are tax deductible.

Name: Tax adjustments to the cost of preferred stock must be made when determining the cost of capital since dividend expenses on preferred stocks are tax deductible.
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Question

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Dividends on preferred stock are not tax-deductible, so no tax adjustments are needed when calculating the cost of capital.

Tax Adjustments to the Cost of Preferred Stock Must Be