The cost of a particular source of capital (debt,preferred stock,common stock)is equal to the investor's required rate of return after adjusting for the effects of both flotation costs and corporate taxes.

Question

Quizplus · Accepted Answer

The cost of a particular source of capital is determined by the investor's required rate of return and can be adjusted for flotation costs and corporate taxes.

The Cost of a Particular Source of Capital (Debt,preferred Stock,common