The after-tax cost of debt for a firm with a 10% before-tax cost of debt and a 30% percent marginal tax rate is:

Question 10 options:

	7 percent.
	3 percent.
	13 percent.
	10 percent.

Earnings reinvested in the firm are represented on a balance sheet by:

Question 8 options:

	total equity.
	retained earnings.
	current assets.
	paid-in capital.

In relation to investments made by the firm, retained earnings:

Question 4 options:

	have an opportunity cost associated with them.
	have no costs since they are owned by the firm.
	have the lowest cost of all financing sources.
	are sunk costs.

How does an increase in the risk-free rate affect the required rate of return of common stocks?

Question 2 options:

	Undetermined effect
	Increases
	No effect
	Decreases