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76. In calculating the costs of the individual components of a firm's financing, the corporate tax rate is important to which of the following
76. In calculating the costs of the individual components of a firm's financing, the corporate tax rate is important to which of the following component cost formulas?
a) common stock.
b) debt.
c) preferred stock.
d) none of the above.
77. The common stock of a company must provide a higher expected return than the debt of the same company because
a) there is less demand for stock than for bonds.
b) there is greater demand for stock than for bonds.
c) there is more systematic risk involved for the common stock.
d) there is a market premium required for bonds.
78. A quick approximation of the typical firm's cost of equity may be calculated by
a) adding a 5 percent risk premium to the firm's before-tax cost of debt. b) adding a 5 percent risk premium to the firm's after-tax cost of debt. c) subtracting a 5 percent risk discount from the firm's before-tax cost of debt.
d) subtracting a 5 percent risk discount from the firm's after-tax cost of debt.
