Multiple Choice
Which one of the following statements is correct? Assume the pretax cost of debt is less than the cost of equity.
A) A firm may change its capital structure if the government changes its tax policies.
B) A decrease in the dividend growth rate increases the cost of equity.
C) A decrease in the systematic risk of a firm will increase the firm's cost of capital.
D) A decrease in a firm's debt-equity ratio will decrease the firm's cost of capital.
E) The cost of preferred stock decreases when the tax rate increases.
Correct Answer:
Verified
Correct Answer:
Verified
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