The effective cost of debt is reduced because
A) interest is a tax-deductible expense
B) interest is not a tax deducible expense
C) interest is paid before preferred dividends
D) interest is paid after common stock dividends
Correct Answer:
Verified
Q22: Preferred stock increases common stockholders' return
A) more
Q23: If the marginal cost of capital rises,
Q24: If the dividend growth model is used,
Q25: As a firm increases its use of
Q26: Retained earnings
A) have no cost
B) are the
Q28: The effective cost of debt depends on
1)
Q29: Debt financing is more risky for firms
Q30: The optimal capital structure involves
A) maximizing the
Q31: The marginal cost of capital rises
1) because
Q32: If equity is negative,
A) debt exceeds total
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