A company’s cost of capital is calculated before taxes in order to represent all costs incurred...
- A company’s cost of capital is calculated before taxes in order
to represent all costs incurred in raising funds
- TRUE
- FALSE
- Requiring that “collateral must be maintained in good
condition” is an example of a positive covenant
- TRUE
- FALSE
Homework Answers
1) False, A company's cost of capital is calculated after considering the tax impact on the cost of debt.
2) True, A positive covenant is a "thou shalt" type of covenant. It specifies an action the company agrees to take or a condition the company must abide by, and The firm must maintain any collateral or security in good condition
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