Which of the following statements is NOT CORRECT?

The cost of capital used in capital budgeting should reflect the average cost of the various types of capital a firm uses to finance the projects.

The cost of equity is a market-determined variable in the sense that its shareholders required return.

The after-tax cost of debt, which is lower than then before-tax cost, is used as the component cost of debt for purposes of developing the firms WACC.

The cost of preferred stock to a firm must be adjusted to an after-tax figure because 70% of preferred dividends received by a corporation may be excluded from the receiving companys taxable income.