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.

---

Definitions:

Intellectual Development

The growth and change in cognitive abilities and intellectual skills that occurs with age.

Cognitive Development

Refers to the progression and changes in cognitive abilities and processes that occur throughout a person's life, including thinking, problem-solving, and information processing.

Negative Physical Consequences

The detrimental effects on the physical body that result from certain behaviors, actions, or environmental factors.

Increased Risk

Refers to a higher likelihood of experiencing a negative event or condition compared to a baseline level.