Which of the following statements is MOST correct? A. Because the cost of debt is lower than the cost of equity, value-maximizing firms maintain debt ratios of close to 100%. B. Corporations that are 100% equity financed will have a much lower weighted average cost of capital because the lack of debt lowers their risk of bankruptcy. C. The source of capital with the lowest after-tax cost is preferred stock, because it is a hybrid security, part debt and part equity. D. The cost of a particular source of capital is equal to the investor's required rate of return after adjusting for the effects of both flotation costs and corporate taxes.
+5
Answers (1)
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Which of the following statements is MOST correct? A. Because the cost of debt is lower than the cost of equity, value-maximizing firms ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Home » Business » Which of the following statements is MOST correct? A. Because the cost of debt is lower than the cost of equity, value-maximizing firms maintain debt ratios of close to 100%. B.