15) Which of the following statements is correct?

A)The value of the cash flows that the assets of a firm are expected to generate is always greater than the value of the cash flows claimed by both the equity and debt investors.

B)Debt with a maturity of less than one year can typically be viewed as permanent debt because firms often borrow the money not to pay off this debt when it matures.

C)The debt with a maturity of more than one year is typically viewed as permanent debt.

D)There is a clear distinction between the before-tax and after-tax cost of equity capital and after-tax cost of equity is less than the before-tax cost of equity.

E)All the answers are correct.

17. Which of the following statements is correct?

A)The finance balance sheet is the same as the accounting balance sheet, but it is based on book values while the accounting balance sheet is based on market values.

B)The U.S. tax code allows a deduction for interest expense incurred on borrowing.

C)The market risk premium for the future is not perfectly known.

D)If a firm has bonds outstanding and the firm would like to calculate the current cost of debt for the bonds, then the firm would use the CAPM to estimate the cost.

E)All the answers are correct.