Consider the Following Equation for the Project WACC with a Fixed

question 26

Multiple Choice

Consider the following equation for the project WACC with a fixed debt schedule: r_wacc = r_U - dτ_c[rD + f(r_U - r_D) ]
The term f in this equation represents

• A) the annual adjustment percentage to the amount of debt.
• B) a measure of the permanence of the debt level.
• C) the dollar amount of debt outstanding.
• D) the debt-to-value ratio.

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