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Justin Lopez, CFA, is the Chief Financial Officer of Waterbury Corporation. Lopez has just been informed that the U.S. Internal Revenue Code may be revised such that the maximum marginal corporate tax rate will be increased. Since Waterbury’s taxable income is routinely in the highest marginal tax bracket, Lopez is concerned about the potential impact of the proposed change. Assuming that Waterbury maintains its target capital structure, which of the following is least likely to be affected by the proposed tax change? A. Waterbury’s return on equity (ROE). B. Waterbury’s after-tax cost of corporate debt. C. Waterbury’s after-tax cost of noncallable, nonconvertible preferred stock. |