It is not possible for a firm's after-tax cost of ordinary equity to be lower than its after-tax cost of debt.

Name: It is not possible for a firm's after-tax cost of ordinary equity to be lower than its after-tax cost of debt.
Brand: Quizplus
Rating: 4.8 (51 reviews)

Question

Quizplus · Accepted Answer

The after-tax cost of debt is tax-deductible, while the after-tax cost of equity is not. Therefore, the after-tax cost of debt will always be lower than the after-tax cost of equity.

It Is Not Possible for a Firm's After-Tax Cost of Ordinary