Which of These Makes This a True Statement? the WACC

question 2

Multiple Choice

Which of these makes this a true statement? The WACC formula

• A) is not impacted by taxes.
• B) uses the after-tax costs of capital to compute the firm's weighted average cost of debt financing.
• C) uses the pre-tax costs of capital to compute the firm's weighted average cost of debt financing.
• D) focuses on operating costs only to keep them separate from financing costs.

---

Definitions:

Indirect Labor

Labor costs associated with support work that cannot be directly linked to the production of goods or services, such as maintenance and supervision.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, excluding direct materials and direct labor costs.

Work in Process

Inventory that includes goods in the process of being manufactured but are not yet completed.

Manufacturing Overhead

Indirect production costs that cannot be directly attributed to specific units produced, such as utilities and rent for the production facility.