1. Which one of the following will decrease the after-tax cost of debt for a firm?
an increase in the risk-free rate of return
an increase in the risk level of the firm
changing the firm's bond rating from A to B
an increase in tax rate
2. Flint Co. tries to decide their cost of capital for one of their division. The company runs several different businesses. They look for similar firms with the same operation as their division. The approach to find the cost of capital is called
systematic
subjective
pure play
beta adjustment