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

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

Quizplus · Accepted Answer

Dividends on preference shares are not tax deductible, so no tax adjustments are needed when determining the cost of capital.

Tax Adjustments to the Cost of Preference Shares Must Be