Sun Flower Farm Inc. has a capital structure of 50% common stock, 10% preferred stock, and 40% debt. The dividend payout ratio is 20%, the company's beta is 1.08, and the tax rate is 21%. Which one of the following statements is correct? Question 99 options:

The cost of equity can only be estimated using the capital asset pricing model.

The company's cost of preferred is most likely less than the company's actual cost of debt. The cost of equity is unaffected by a change in the company's tax rate.

The aftertax cost of debt will be greater than the current yield-to-maturity on the company's outstanding bonds.

The weighted average cost of capital will remain constant as long as the company's capital structure remains constant.