Which of the following statements is CORRECT?

a.If a firm has been suffering accounting losses and is expected to continue suffering such losses in the foreseeable future, and therefore its tax rate is zero, then it is possible for the after-tax cost of preferred stock to be less than the after-tax cost of debt.

b.An increase in the flotation cost required to sell a new issue of stock will increase the cost of retained earnings.

c.An increase in a firm's tax rate will increase the component cost of debt, provided the YTM on the firm's bonds is not affected.

d.Since its stockholders are not directly responsible for paying a corporation's income taxes, corporations should focus on before-tax cash flows when calculating the WACC.

e.When the WACC is calculated, it should reflect the cost of new common stock, retained earnings, preferred stock, long-term debt, short-term bank loans if the firm normally finances with bank debt, and accounts payable if the firm normally has accounts payable on its balance sheet.