DESCRIPTIVE QUESTIONS
  1. How do you calculate the after-tax cost of debt? Does it increase with a decrease in tax rate?
  2. How do you treat the floatation cost while computing the cost of either debt, or preference share or equity share capital?
  3. Does the cost of debt change when debentures are sold either at premium or at a discount?
  4. How do you compute the cost of preference shares? Is it true that the cost of preference shares is higher than the cost of debt?
  5. Explain the different ways in which the cost of equity shares is computed.
  6. What is the weighted average cost of capital? When is the marginal cost different from the average cost of capital?

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