Consider the Following Equation: Rwacc = RE

question 97

Multiple Choice

Consider the following equation: rwacc = rE + rD(1 - τc)
The term E in this equation is:

• A)the dollar amount of equity.
• B)the dollar amount of debt.
• C)the required rate of return on debt.
• D)the required rate of return on equity.

---

Definitions:

Capital Section

Part of a company’s balance sheet that details the funding provided by owners and investors, including paid-in capital and retained earnings.

Revenue Section

Part of the income statement that details the amounts earned from normal business operations, excluding expenses to calculate gross profit.

Asset Section

Part of a balance sheet that lists a company's assets, including current and non-current (or long-term) assets.

Oral Agreement

A contract or agreement made through spoken communication rather than in writing, yet legally binding in many cases.