Which of the following statements is correct? The cost of retained earnings is generally lower than the cost of new common stock. The cost of retained earnings is generally higher than the cost of new common stock. If a company with a debt ratio of 70 percent were suddenly exempted from all future income taxes, then, all other things held constant, this would cause its WACC to decrease. The WACC should include only after-tax component costs. Therefore, the required rates of return (or market rates) on debt, preferred, and common equity must be adjusted to an after-tax basis before they are used in the WACC equation