The aftertax cost of debt generally decreases


The aftertax cost of debt generally decreases when:

I. A firm's bond rating increases.

II. The market rate of interest decreases.

III. Tax rates increase.

IV. Bond prices drop.

A. I and III only

B. II and III only

C. I, II, and III only

D. II, III, and IV only

E. I, II, III, and IV

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Financial Management: The aftertax cost of debt generally decreases
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