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Which of the following statements is CORRECT? Since the money is readily available, the cost of equity using retained earnings is usually much lower than

Which of the following statements is CORRECT?

  • Since the money is readily available, the cost of equity using retained earnings is usually much lower than the after-tax cost of debt.
  • If a companys tax rate increases but the YTM on its non-callable bonds remains the same, the after-tax cost of its debt will fall.
  • All else equal, an increase in a companys stock price will increase its marginal cost of retained earnings, rs.
  • When calculating the cost of preferred stock, a company needs to adjust for taxes, because preferred stock dividends are deductible by the paying corporation.
  • All else equal, an increase in a companys stock price will increase its marginal cost of new common equity, re.

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