Statements about the corporate cost of capital

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Which of the following statements about the corporate cost of capital is most correct?

The cost-of-capital estimate is a before-tax estimate.

The effective (after-tax) cost of debt to similar for-profit and not-for-profit businesses is roughly the same in most situations.

Preferred stock and short-term debt are never included in the cost-of-capital estimate.

The corporate cost-of-capital estimate is based on the cost of embedded (current) capital.

The corporate cost-of-capital estimate is based on the cost of embedded (current) debt coupled with the cost of newly issued equity.

Reference no: EM131595387

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