The aftertax cost of which of the following is affected by a change in a firm's tax rate?
I.Preferred stock
II.Debt
III.Equity
IV.Capital

Question

Quizplus · Accepted Answer

The aftertax cost of debt is affected by the change in the firm's tax rate, as the interest paid on debt is tax-deductible. The aftertax cost of preferred stock, equity, and capital are not affected by changes in the firm's tax rate.

The Aftertax Cost of Which of the Following Is Affected