QUESTION 12 Which of the following statements is most likely correct When calculating the cost of equity, a company needs to adjust for taxes, because a because interest payments are deductible by the paying corporation b because dividends payments are deductible by the paying corporation c an increase in the risk free rate will have a greater effect on the after tax cost d None of the above

Question

QUESTION 12  Which of the following statements is most likely correct  When calculating the cost of equity, a company needs to adjust for taxes, because  a  because interest payments are deductible by the paying corporation  b  because dividends payments are deductible by the paying corporation  c  an increase in the risk free rate will have a greater effect on the after tax cost  d  None of the above

Accepted Answer

The Answer is in the image, click to view ...

	a.	because interest payments are deductible by the paying corporation.
	b.	because dividends payments are deductible by the paying corporation.
	c.	an increase in the risk-free rate will have a greater effect on the after-tax cost.
	d.	None of the above.

Question

QUESTION 12: Which of the following statements is most likely correct: When calculating the cost of equity, a company needs to adjust for taxes, because:

Step by Step Solution

Step: 1

Get Instant Access to Expert-Tailored Solutions

Step: 2

Step: 3

Ace Your Homework with AI