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O Preferred equity is a separate component of WACC. O There is a tax shield on the equity dividends paid. O The equity component of WACC reflects the return expected by the company's sharehol O Market values should be used in calculating WACC.

O Preferred equity is a separate component of WACC. O There is a tax shield on the equity dividends paid. O The equity component of WACC reflects the return expected by the company's sharehol O Market values should be used in calculating WACC.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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All of the following statement is true EXCEPT Preferred equity is a separate component of WACC. There is a tax shield on the equity dividends paid. The equity component of WACC reflects the return expected by the company's shareholders. Market values should be used in calculating WACC.
Transcribed Image Text:All of the following statement is true EXCEPT Preferred equity is a separate component of WACC. There is a tax shield on the equity dividends paid. The equity component of WACC reflects the return expected by the company's shareholders. Market values should be used in calculating WACC.
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