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The Pre-Tax Cost of Capital Is Higher Than the After-Tax

Question 97

Multiple Choice

The pre-tax cost of capital is higher than the after-tax cost of capital because


A) interest expense is deductible for tax purposes.
B) principal payments on debt are deductible for tax purposes.
C) the cost of capital is a deductible expense for tax purposes.
D) dividend payments to stockholders are deductible for tax purposes.

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