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Why is the after-tax cost of debt, rather than its before-taxrequired rate of return, used to calculate the weighted average costof capital?

Following IFRS, which statement is false? Group of answer choices The revaluation surplus account is a specific account reported as an unrealized gain in the statement of comprehensive income. If the revaluation initially increases the long-term operating asset's carrying value, the firm records the difference between the carrying value and the fair value (the unrealized gain) in the revaluation surplus account. The revaluation surplus account is a specific account reported in other comprehensive income (OCI) in the statement of comprehensive income. If a long-term operating asset's fair value decreases in subsequent accounting periods, after an earlier write-up, the firm reduces the revaluation surplus if it exists.

The equation for M & M Proposition I, with taxes, is best shown as?

When one uses the after-tax weighted average cost of capital (WACC) to value a levered firm, the interest tax shield is:   Multiple Choice A) capitalized by the levered cost of equity. B) not accounted for by the use of the WACC. C) automatically considered because the after-tax cost of debt is included within the WACC formula.  D) considered by deducting the interest payment from the cash flows.

Which is not a benefit of debt to the corporation?a. interest payments are tax deductibleb. when debt is used heavily, it increases stock valuec. In periods of inflation, debt is paid back with amounts that are worth less than the ones borrowed.d. compared to equity, debts have a lower cost of capitale. answer not given

Q ) If the corporate income tax rate were to increase, then the use of debt will become more desirable in terms of increasing ROE. (All else equal.) a - True  b - False

Which one of the following statements related to capital gains is correct? Multiple Choice O O O O The capital gains yield includes only realized capital gains. An increase in an unrealized capital gain will increase the capital gains yield. The capital gains yield must be either positive or zero. The capital gains yield is expressed as a percentage of a security's total return. The capital gains yield represents the total return earned by an investor.

Regarding the trade-off theory, capital structure is a trade-off between: tangible and intangible asset risk. tax savings and financial distress costs. high and low target debt ratios. tax shields and equity financing.

1. Which of the following regarding the weighted-average cost of capital is true?   a. Taxes do not affect the weighted-average cost of capital. b. The tax effect of preferred stock dividends should be included in the calculation of weighted-average cost of capital. c. The tax effect of debt should be included in the calculation of the weighted-average cost of capital. d. The tax effect of common stock dividends should be included in the calculation of weighted-average cost of capital.   2. Which of the following statements about the cost of capital is incorrect? a. Flotation costs can increase the weighted average cost of capital. b. A company’s target capital structure affects its weighted average cost of capital. c. An increase in the risk-free rate is likely to increase the marginal costs of both debt and equity financing. d. If a company’s tax rate increases, then, all else equal, its weighted average cost of capital will increase. e. Weighted average cost of…

The equivalent after-tax return for an investment is computed a O ● Pretax return / (1 - tax rate) O Pretax return / tax rate Pretax return * tax rate O Pretax return * (1 - tax rate)

The Adjusted Present Value approach to valuation uses Interest Tax Savings to account for:     a. The unlevered cost of equity.     b. Property taxes.     c. Dividends that could have been paid to common stockholders.     d. Changes in capital structure over the planning period.     e. None of the above.

is the symbol that represents the before-tax cost of debt in the weighted average cost of capital (WACC) equation.

Following IFRS, which statement is false? Group of answer choices The revaluation surplus account is a specific account reported as an unrealized gain in the statement of comprehensive income. If a long-term operating asset's fair value decreases in subsequent accounting periods, after an earlier write-up, the firm reduces the revaluation surplus if it exists. If the revaluation initially increases the long-term operating asset's carrying value, the firm records the difference between the carrying value and the fair value (the unrealized gain) in the revaluation surplus account. The revaluation surplus account is a specific account reported in other comprehensive income (OCI) in the statement of comprehensive income.

3.