A firm has a cost of equity of 10 per cent,a cost of preferred of 9 per cent,and an after tax cost of debt of 5 per cent.Given this,which one of the following will decrease the firm's cost of capital?
A) exercising the call option on the debt
B) decreasing the firm-specific risk associated with the firm
C) issuing new debt to offset an increase in the dividend payout ratio
D) increasing the systematic risk of the firm
E) decreasing the debt-equity ratio
Correct Answer:
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