To estimate the after-tax cost of common stock you must: A) multiply

To estimate the after-tax cost of common stock you must:

A) multiply the before-tax cost of equity by (1 – tax rate)
B) multiply the before-tax cost of equity by (1 + tax rate)
C) multiply the before-tax cost of equity by (tax rate)
D) None of the above because common stock dividend payments are not tax deductible for the firm.

ANSWER

D