kayyriv8618 kayyriv8618

26-12-2019
Business

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When calculating the afterminustax weighted average cost of capital (WACC), which of the following costs is adjusted for taxes in the equation?A. The before−tax cost of preferred stock
B.The before−tax cost of equity
C.The after−tax cost of debt
D.The before−tax cost of debt

Respuesta :

ahmedgodtrust ahmedgodtrust

27-12-2019

Answer:

The before-tax cost of debt is adjusted for tax in the computation of weighted average cost of capital.

The correct answer is D

Explanation:

In the calculation of weighted average cost of capital, the before tax cost of debt is adjusted for tax so as to obtain the after-tax cost of debt. Cost of equity and cost of preferred stocks will not be adjusted for tax.

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