Two considerations that cause a corporation\'s cost of capital to be different t

Question

Two considerations that cause a corporation's cost of capital to be different than its investors' required returns are: corporate taxes and flotation costs. individual taxes and corporate taxes. corporate taxes and the earned income tax credit. individual taxes and dividends. Due to changes in regulatory requirements, the transactions costs associated with selling corporate securities increased by $ 1 per share. This change will: cause the cost of capital to decrease. cause the cost of capital to decrease only if investors may be billed for part of the increase in transactions costs. have no effect on the cost of capital because transactions costs are expensed immediately. cause the cost of capital to increase.

Explanation / Answer

Hi, Please find the answers as follows: a) Corporate Taxes and Flotation Costs. b) Have no effect on the cost of capital. Thanks.

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