7. (TCO 5, 6 and 7) Which one of the following is a correct statement regarding a firm's weighted average cost of capital (WACC)? (Points : 4) the WACC can be used as the required return for all new projects. the WACC of a leveraged firm will decrease when the tax rate decreases. an increase in the market risk premium will tend to decrease a firm's WACC. the WACC is a starting point for the subjective approach to setting discount rates. a reduction in the risk level of a firm will tend to increase the firm's WACC. 8. (TCO 5, 6 and 7) The preferred stock of Blue Sky Air pays an annual dividend of $7.25 a share and sells for $54 a share. The tax rate is 35 percent. What is the firm's cost of preferred stock? (Points : 4) 8.56 percent 9.32 percent 11.85 percent 13.43 percent 14.47 percent