Which is a true statement Flotation cost must be considered with retained earnings Since taxes are required they are not a factor to investors The investor required rate of return is the firm's costs of capital Debt has $0 marginal cost In general the after tax cost of debt is the most expensive component in the cost of capital

The financial manager of a firm determines the following schedules of cost of debt and cost of equity for various combinations of debt financing:   Debt/Assets After-Tax Cost of Debt Cost of Equity 0 % 4 % 7 % 10   4   7   20   4   7   30   4   9   40   5   10   50   5   12   60   8   13   70   8   15     Find the optimal capital structure (that is, optimal combination of debt and equity financing). Round your answers for the capital structure to the nearest whole number and for the cost of capital to one decimal place. The optimal capital structure:   % debt and   % equity with a cost of capital of   % Why does the cost of capital initially decline as the firm substitutes debt for equity financing? The cost of capital initially declines because the firm cost of debt is  than the cost of equity. Why will the cost of funds eventually rise as the firm becomes more financially leveraged? As the firm becomes more financially leveraged and riskier, the cost of debt…

which one is correct please confirm? QUESTION 37 Which of the following statements is true concerning companies that do not pay dividends?   a. The cost of equity capital can be estimated using the Capital Asset Pricing Model.   b. The cost of equity capital is equal to the growth short-term rate of earnings per share.   c. The dividend capitalization model can be used to determine an accurate cost of equity capital.   d. None of these are correct

The optimal capital structure for firms in stable industries can reasonably contain ________________ than firms in volatile industries. Select one: A. more debt B. less debt C. an equal amount of debt D. There is no relationship between the cyclical nature of an industry and optimal capital structure