26. Firms in the death stage typically will cut their dividend in order to preserve retained earnings. True b. False a. 27. For capital budgeting and cost of capital purposes, the firm should always consider retained earnings as the first source of capital--i.e., use these funds first--because retained earnings have no cost to the firm. True b. False a. 28. The fact that long-term debt and common stock are raised infrequently and in large amounts lessens the need for the firm to forecast those accounts on a continual basis. True b. False a. 29. If a new machine is predicted to yield 12% for the coming six years, the firm should buy this machine when the Re is at least 12%. True b. False a. 30. Due to the higher risk of Preferred Stock vis--vis Debt, preferred stock investors typically want a higher yield and will provide a lower amount of capital. True b. False a