Which of the following statements best describes cost of capital?

		Because no flotation costs are required to obtain capital as retained earnings, the cost of retained earnings is generally lower than the after-tax cost of debt.
		Because of the risk of bankruptcy, the cost of debt is always higher than the cost of equity capital.
		Higher flotation costs tend to reduce the cost of equity capital.
		Among all choices of weights, the target weight is the best option to use for calculation.