Which of the following statements about the cost of capital is INCORRECT? Select one: O a. The reason we must assign a cost of capital to retained earnings involves the opportunity cost principle. O b. A company's target capital structure does not affect its weighted average cost of capital. OC WACC should be calculated based on the market value instead of the book value. O d. Weighted average cost of capital calculations should be focused on the after-tax costs. e WACC should be calculated based on the marginal costs instead of the historical costs. Which of the following statements about the cost of capital is CORRECT? Select one: O a. Both the cost of debt and equity financing will decrease when a firm expands into a risky new area. O b. Both the cost of debt and equity financing will decrease when a firm increases its debt/asset ratio. c The WACC of a firm will decrease when investors become more risk averse O d. Both the cost of debt and equity financing will increase when a nuclear plant company encounters a ban on nuclear power generation in certain states. O. Both the cost of debt and equity financing will decrease when the Federal Reserve tightens credit. Hart Enterprises has preferred stock outstanding that pays a dividend of $12 at the end of each year. The preferred stock sells for $75.47 a share. What is the preferred stock's predicted rate of return? Select one: O a. 12.50% Ob 11.36% 13.25% . Od 8.80% Oe 15.90%