Flotation costs can increase the cost of preferred stock
Course:- Financial Management
Reference No.:- EM131063172

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Which of the following statements about the cost of capital is INCORRECT?

a. A company's target capital structure affects its weighted average cost of capital.

b. Weighted average cost of capital calculations should be based on the after-tax-costs of all the individual capital components.

c. If a company's tax rate increases, then, all else equal, its weighted average cost of capital will increase.

d. Flotation costs can increase the cost of preferred stock.

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