A-Since debt capital can cause a company to go bankrupt but equity capital canno

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A-Since debt capital can cause a company to go bankrupt but equity capital cannot, debt is risker than equity, and thus the after-tax cost of debt is always greater than the cost of equity.
B-The tax-adjusted cost of debt is always greater than the interest rate on debt, provided the company does in fact pay taxes.
C-If a company assigns the same cost of captial to all of its projects regardless of each project's risk, then the comapny is likely to reject some safe projects that it actually should accedpt and to assct some risky projects than it should reject.
D-Because no floatation costs are required to obtain capital as retained earnings, the cost of retrained earnings is generally lower than the after-tax cost of debt.
E-High floatation costs tend to reduce the cost of equity capital.

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