1. Which of the following statements is CORRECT? a. The cost of preferred stock should be expressed as "(l-T], This follows because preferred stock dividends are treated as fixed charges, and as such they can he deducted by the issuer for tax purposes. b. No cost should be assigned. to common equity because the rm does not have to pay dividends. therefore it is not company's obligations before the investors. c. Suppose a rm has been losing money and thus is not paying taxes, and this situation is expected lo persist into the foreseeable future. In this case, the rm's before-tax and after-lax costs of debt for purposes of calculating the WACC will both be equal to the interest rate on the rm's currently outstanding debt, provided that debt was issued during the past 5 years. d. The target capital structure should be based on the current leverage and t_ the costs offunds raised before. e. None of the above 2. Is it true? NOPAT is a measure of protability that is calculated as an operating prot minus other income and expenses including interest payments and interest income. 3. Is it tme? If our cash ratio is less than 1.0, then borrowing short-term funds are using these funds to build up our cash account would cause the current ratio to increase. 4. AOL Corp. sells on terms that allow customers 45 days to pay for merchandise. Its sales last year were $758 000, and its year-end accounts receivables were $96 000. If its DSO (days sales outstanding) is less than the 45-day credit period, then customers are paying on time. By how much are customers paying early or late