The Difference Between the Weighted-Average Cost of Capital (WACC)and the Pre-Tax

question 62

Multiple Choice

The difference between the weighted-average cost of capital (WACC) and the pre-tax (unlevered) WACC is:

• A)the weighted-average cost of capital is based on the after-tax cost of equity and the pre-tax WACC is based on the after-tax cost of debt.
• B)the weighted-average cost of capital multiplies the cost of equity and the cost of debt by (1-tax rate)and the pre-tax WACC does not.
• C)the weighted-average cost of capital multiplies the cost of debt by (1-tax rate)and the pre-tax WACC does not.
• D)the weighted-average cost of capital multiplies the component costs of equity and debt by their weight in the capital structure,and the pre-tax WACC does not.

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Definitions:

Performance Appraisal

A formal assessment process where an employee's job performance and productivity are evaluated by their supervisor.

Objective Personnel Decisions

Employment decisions made based on measurable criteria, unbiased evaluations, and factual information, minimizing subjectivity.

Appraisal Technique

Methods or processes used to assess the value or performance of an asset, employee, or project.

Legal Defensibility

The capability of a policy, action, or practice to be defended in legal proceedings, typically by demonstrating that it is justified, fair, and compliant with laws.