Question

One way for a firm to reduce its cost of capital is to: d) You can't - your cost of capital is determined by investor's required rate of return b) Don't pay dividends, thus reducing the amount of money paid to shareholders a) Replace existing bonds with new bonds which carry a lower coupon rate of interest c) Use lower cost capital (e.g., debt) to retire or pay-off higher cost capital (e.g., preferred stock)

Answer 1

The way to reduce the cost of capital is to:-

c) Use lower-cost capital(e.g., debt) to retire or pay-of higher cost capital (e.g., preferred stock)