[nastilles]

Which of the following statements regarding calculating a firm's cost of capital is correct ?
Answer

a. if a company's beta increases, this will increase the cost of equity financing
b. since retained earnings are readily available, the cost of retained earnings is generally lower than the cost of debt
c. the level of general economic conditions will determine whether a firm should utilize an arithmetic average cost of capital or a weithted average cost of capital
d. the after-tax cost of debt is generally more expensive than the after-tax cost of preferred stock