Make sure that each answer contains a minimum of 250 words and with scholarly references. Use the APA 7th referencing style.

1. Why is the after-tax cost of debt rather than the before-tax cost used to calculate the WACC? 2. Is a tax adjustment made to the cost of preferred stock? Why or why not? 3. Why must a cost be assigned to retained earnings? 4. Suppose interest rates in the economy increase. How would such a change affect the costs of both debt and common equity based on the CAPM? 5. Identify some problem areas in cost of capital analysis. Do these problems invalidate the cost of capital procedures discussed in this learning packet?

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