Which of the following costs must be adjusted to an after-tax cost?
A) cost of debt
B) cost of preferred stock
C) cost of common stock
D) cost of retained earnings

Question

Quizplus · Accepted Answer

The cost of debt must be adjusted to an after-tax cost because interest payments on debt are tax-deductible, which reduces the actual cost of borrowing. Therefore, the after-tax cost of debt will be lower than the stated nominal cost.

Which of the Following Costs Must Be Adjusted to an After-Tax