Homework Answers
It is incorrect to say That cost of debt should only be adjusted when the firm sells new Bond. It is considered every time for valuation of debt and firm.
It is correct that cost changes when yield is changed. It is also correct that cost of debt always consider the net proceeds from Bond sale and brokers fees etc. Cost of debt reflects the borrowing cost at current market rates. All statement are correct except B.
So, answer is B.
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