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:

Neuralgia

Severe pain along the course of a nerve, often due to changes in nerve structure or function.

Nervous System

A complex network of nerves and cells that transmit signals between different parts of the body.

Total Knee Replacement

A surgical procedure in which damaged or diseased parts of the knee joint are replaced with artificial components.

Medical Abbreviation

Shortened forms used to represent terms and phrases related to medicine and healthcare.