Multiple Choice
The cost of equity capital in the form of new common stock will be higher than the cost of retained earnings because of
A) the existence of taxes.
B) the existence of flotation costs.
C) investors' unwillingness to purchase additional shares of common stock.
D) the existence of financial leverage.
Correct Answer:
Verified
Correct Answer:
Verified
Q5: Lewis, Schultz, and Nobel Development Corp. has
Q6: Although the after-tax cost of debt is
Q7: As the risk-free rate increases, the required
Q8: If the flotation cost goes up, the
Q9: The cost of capital generally varies inversely
Q11: Given an optimal capital structure that
Q12: The capital asset pricing model (CAPM) relates
Q13: New common stock is more expensive than
Q14: Which of the following is NOT true
Q15: For a firm paying 5% for new