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Which of the Following Is the Correct Relationship Between Different

Question 30

Multiple Choice

Which of the following is the correct relationship between different capital components of a firm? rd = before-tax cost of debt; rs = cost of retained earnings; re = cost of new common equity


A) rs < re
B) rd = rs
C) rs = re
D) rs < rd
E) re = re + rd

Correct Answer:

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