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13 July, 12:19

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

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Answers (1)
  1. 13 July, 12:26
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    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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Home » Business » 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.
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