The Weighted Average Cost of Capital (WACC) on an After-Tax

question 37

True/False

The weighted average cost of capital (WACC) on an after-tax basis is calculated as: WACC = (rD) (1 - TC ) (D/V) + (rE) (E/V) where: V = D + E

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Definitions:

Book Values

The value of an asset as recorded on a company's balance sheet, calculated as cost minus accumulated depreciation.

Consolidated Cash

The total cash amount reported on the consolidated financial statements, combining the cash holdings of a parent company and its subsidiaries.

Cash

A form of currency that includes physical bills and coins used in transactions.

Voting Shares

Shares that give the owner the right to vote on company matters, such as electing directors, at shareholder meetings.