Choose the best answer, and why.

In calculating WACC, we calculate After Tax cost of debt but do not make any such distinction between after tax and before tax costs for cost of preferred stock or cost of common equity.

A. This is because debt is the least risky component of capital

B. This is because debt is the most risky component of capital, because too much debt can push the company into bankruptcy, which is not the case with preferred stock or common equity

C. This is because of regulatory reasons

D. This is only because of corporate tax reasons