When calculating the cost of capital

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Question - Why is the yield to maturity on a bond the appropriate cost of debt financing? Should retained earnings reinvested in the company have a zero cost of capital because the company generates the funds internally and does not need to pay itself for borrowing money? If not, why?

When calculating the cost of capital, why is it that the company adjusts only the cost of debt for taxes?

Reference no: EM132930362

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