The primary determinant of a firm's cost of capital is the firm's __________________. debt-equity ratio of...

The primary determinant of a firm's cost of capital is the firm's __________________.

debt-equity ratio of any new funds raised
marginal tax rate
pretax cost of equity
aftertax cost of equity
use of the funds raised

Pick the correct statement related to cost of debt from below.

A company's pretax cost of debt is based on the current yield to maturity of the company's outstanding bonds.
A company's pretax cost of debt is equal to the coupon rate on the latest bonds issued by the company.
A company's pretax cost of debt is equivalent to the average current yield on all of a company's outstanding bonds.
A company's pretax cost of debt is based on the original yield to maturity on the latest bonds issued by a company.
A company's pretax cost of debt has to be estimated as it cannot be directly observed in the market.

Expert Solution

Ans 1 use of the funds raised

The primary determinant of a firm's cost of capital is the firm's use of the funds raised

Ans 2 A company's pretax cost of debt is based on the current yield to maturity of the company's outstanding bonds.

jeff jeffy answered 2 years ago

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