Which of the Following Statements About the Cost of Capital

Multiple Choice

Which of the following statements about the cost of capital is incorrect?

A) A company's target capital structure affects its weighted average cost of capital.
B) Weighted average cost of capital calculations should be based on the after-tax-costs of all the individual capital components.
C) If a company's tax rate increases, then, all else equal, its weighted average cost of capital will increase.
D) The cost of retained earnings is equal to the return stockholders could earn on alternative investments of equal risk.
E) Flotation costs can increase the cost of preferred stock.