Which one of the following statements is correct? Assume the pretax cost of debt is less than the cost of equity.
A firm may change its capital structure if the government changes its tax policies.
A decrease in the dividend growth rate increases the cost of equity.
A decrease in the systematic risk of a firm will increase the firm's cost of capital.
A decrease in a firm's debt-equity ratio will decrease the firm's cost of capital.
The cost of preferred stock decreases when the tax rate increases.