When calculating the after-tax weighted average cost of capital (WACC)
When calculating the after-tax weighted average cost of capital (WACC), which of the following costs is adjusted for taxes in the equation?
A) The before-tax cost of equity
B) The before-tax cost of debt
C) The before-tax cost of preferred stock
D) The after-tax cost of debt
ANSWER
Answer: B
Explanation: B) WACCadj = × Rd × (1 – Tc) + × Rps + × Re.
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