One Calculates the After-Tax Weighted Average Cost of Capital (WACC)using

question 68

Multiple Choice

One calculates the after-tax weighted average cost of capital (WACC) using which of the following formulas?

• A)WACC = (r_D)(D/V)+ (r_E)(E/V), where V = D + E.
• B)WACC = (r_D)(1 − T_C)(D/V)+ (r_E)(1 − T_C)(E/V), where V = D + E.
• C)WACC = (r_D)(D/E)+ (r_E)(E/D).
• D)WACC = (r_D)(1 − T_C)(D/V)+ (r_E)(E/V), where V = D + E.

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Definitions:

Aging of Accounts Receivable

A method of categorizing accounts receivable based on how long they have been outstanding.

Percentage of Sales Basis

A forecasting method where certain expenses or accounts are based on a predetermined percentage of sales.

Bad Debt Expense

The cost associated with accounts receivable that a company does not expect to collect.

Aging Schedule

A table summarizing the amounts owed to a business, grouped by the length of time the bills have been outstanding, used to monitor and manage receivables.