The primary determinant of a firm's cost of capital is the firm's __________________.

• debt-equity ratio of any new funds raised

• marginal tax rate

• pretax cost of equity

• aftertax cost of equity

• use of the funds raised

Pick the correct statement related to cost of debt from below.

• A company's pretax cost of debt is based on the current yield to maturity of the company's outstanding bonds.

• A company's pretax cost of debt is equal to the coupon rate on the latest bonds issued by the company.

• A company's pretax cost of debt is equivalent to the average current yield on all of a company's outstanding bonds.

• A company's pretax cost of debt is based on the original yield to maturity on the latest bonds issued by a company.

• A company's pretax cost of debt has to be estimated as it cannot be directly observed in the market.