Question
Which one of the following statements related to WACC is correct? Since dividends on preferred stock are tax deductible, a firm's cost of preferred stock
Which one of the following statements related to WACC is correct?
Since dividends on preferred stock are tax deductible, a firm's cost of preferred stock should be considered on an after-tax basis.
A firm should accept all projects for which IRR exceeds WACC, regardless of project risk.
The most appropriate weights to use in the WACC are calculated using the book values of debt, common stock, and preferred stock.
A higher risk project should be evaluated using a discount rate that is higher than the firm's overall cost of capital.
A firm's WACC is not affected by changes in corporate tax rates.
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