1. The cost of equity capital in the form of new common stockwill be higher than the cost of retained earnings because of:a.the existence of taxes.b.the existence of flotation costsc.investors unwillingness to purchase additional shares of commonstockd.the existence of financial leverage2. Lewis Schultz and Nobel Development Corp. has an after-tax costof debt of 6.3 percent. With a tax rate of 30% what is the yieldon the debt?a.4.41%b.9.0%c.1.89%d.21%
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