1) A firm\'s cost of capital is influenced by A: capital structure B: the curren
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1) A firm's cost of capital is influenced by A: capital structure B: the current ratio C: par value of common stock D: net income 2) In general, the least expensive source of capital is A: debt B: new common stock C: retained earnings D: preferred stock 3) The cost of retained earnings is less than the cost of new common stock because A: flotation costs are incurred when new stock is issued B: marginal tax brackets are not deductable C: dividends are not tax deductible D: accounting rules allow a deduction when using retained earnings 1) A firm's cost of capital is influenced by A: capital structure B: the current ratio C: par value of common stock D: net income 2) In general, the least expensive source of capital is A: debt B: new common stock C: retained earnings D: preferred stock 3) The cost of retained earnings is less than the cost of new common stock because A: flotation costs are incurred when new stock is issued B: marginal tax brackets are not deductable C: dividends are not tax deductible D: accounting rules allow a deduction when using retained earnings A: capital structure B: the current ratio C: par value of common stock D: net income 2) In general, the least expensive source of capital is A: debt B: new common stock C: retained earnings D: preferred stock 3) The cost of retained earnings is less than the cost of new common stock because A: flotation costs are incurred when new stock is issued B: marginal tax brackets are not deductable C: dividends are not tax deductible D: accounting rules allow a deduction when using retained earningsExplanation / Answer
Capital structure is proportion of debt and equity.
Expected return on equity is always greater than debt.
Floating Costs are paid by the company that issues the new securities and includes expenses such as underwriting fees, legal fees and registration fees.
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