The cost of common equity is already on an after-tax basis since dividends paid to common stockholders are not tax-deductible.

Name: The cost of common equity is already on an after-tax basis since dividends paid to common stockholders are not tax-deductible.
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Question

Quizplus · Accepted Answer

Dividends paid to common stockholders come out of a company's after-tax profits and are not tax-deductible. Therefore, the cost of common equity is already on an after-tax basis.

The Cost of Common Equity Is Already on an After-Tax