Assume the pretax cost of debt is less than cost of equity

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Which one of the following statements is correct? Assume the pretax cost of debt is less than the cost of equity.

A firm may change its capital structure if the government changes its tax policies.

A decrease in the dividend growth rate increases the cost of equity.

A decrease in the systematic risk of a firm will increase the firm's cost of capital.

A decrease in a firm's debt-equity ratio will decrease the firm's cost of capital.

The cost of preferred stock decreases when the tax rate increases.

Reference no: EM131043945

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