Which of the Following Best Reflects the Correct Cost of Debt

question 47

Multiple Choice

Which of the following best reflects the correct cost of debt used to calculate a firm's WACC?

• A)The before-tax cost of debt, which is higher than the after-tax cost, is used as the component cost of debt for purposes of developing the firm's WACC.
• B)The after-tax cost of debt, which is higher than the after-tax cost, is used as the component cost of debt for purposes of developing the firm's WACC.
• C)The before-tax cost of debt, which is lower than the after-tax cost, is used as the component cost of debt for purposes of developing the firm's WACC.
• D)The after-tax cost of debt, which is lower than the after-tax cost, is used as the component cost of debt for purposes of developing the firm's WACC.

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Refers to the Uniform Commercial Code, a set of laws regulating sales and commercial transactions in the United States.

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