a question from cfai reading 45

which of the following statements is correct A the appropriate tax rate to use in the adjustment of the before-tax cost of debt to determine the after-tax cost is the average tax rate b/c interest is deductible against the company’s entire taxable income. B for a given company, the after-tax cost of debt is less than both the cost of preferred equity and the cost of common equity. C for a given company, the investment opportunity schedule is upward sloping b/c as a company invests more in capital projects, the returns from investing increase. D the target capital structure is the average ratio of debt to equity for the most recent fiscal years.


3x thunder