Enamel Manufacturing (EM) is considering investing in a new vehicle. EM finances new projects using retained earnings and bank loans. This new vehicle is expected to have the same level of risk as the typical investment made by EM. Which one of the following should the firm use in making its decision（）
A. After-tax cost of debt.
B. Marginal cost of capital.
C. Cost of preferred stock.
参考答案：B
解析：
The marginal cost of capital represents the cost of raising an additional dollar of capital. Preferred stock is not a method of financing for the company. The cost of retained earnings would only be appropriate if the company avoided creditor-supplied financing or the issuance of new common or preferred stock (and preferred stock financing). The after-tax cost of debt is never sufficient, because a business, regardless of their size, always has a residual owner, and hence a cost of equity.