Which of the following is correct? © New common stock is less expentlve than retained earning C. The WACC measures the a
Posted: Thu Apr 28, 2022 1:42 pm
Which of the following is correct?
© New common stock is less expentlve than retained
earning
C. The WACC measures the average riskiness of the firm's
projects. If the potential project is much r
skier than the firm's average projects, you
cannot use WACC, but risk-adjusted WACC to decide
whether to accept the project.
'0 The retained earnings are free.
C Preferred stock has tax deductibility.
C The WACC as used in capital budgeting is an estimate
of a company's before-tax cost of capital.
© New common stock is less expentlve than retained
earning
C. The WACC measures the average riskiness of the firm's
projects. If the potential project is much r
skier than the firm's average projects, you
cannot use WACC, but risk-adjusted WACC to decide
whether to accept the project.
'0 The retained earnings are free.
C Preferred stock has tax deductibility.
C The WACC as used in capital budgeting is an estimate
of a company's before-tax cost of capital.