DeGroote Industries has a capital structure of 50 percent common stock, 10 percent preferred stock, and 40 percent debt. The firm has a 60 percent dividend payout ratio, a beta of 0.89 , and a tax rate of 38 percent. Given this, which one of the following statements is correct? The after-tax cost of debt will be greater than the current yield-to-maturity on the firm's bonds. The cost of equity can only be estimated using the CAPM approach. The firm's cost of equity is unaffected by a change in the firm's tax rate. The firm's cost of preferred is most likely less than the firm's actual cost of debt