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Business, 22.06.2019 10:20 michaelwarren8728

Which of the following statements about a not-for-profit firm’s cost of capital estimate is most correct? a. since a not-for-profit firm has no shareholders, its wacc estimate does not include a cost of equity (fund capital) estimate. b. the capital structure weights for a not-for-profit firm are set at 50/50, because such firms can raise $1 of debt financing for each dollar of retained earnings. c. the cost of tax-exempt debt issued by not-for-profit firms is increased (“grossed up”) by 1 - t in the wacc estimate to reflect the fact that such firms do not pay taxes. d. equity (fund) capital has a cost that is roughly equivalent to the cost of retained earnings to similar investor-owned companies. e. none of above is correct.

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Which of the following statements about a not-for-profit firm’s cost of capital estimate is most cor...
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