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:

Reproductive Organs

Organs involved in the production of gametes (sperm and eggs) and in supporting the processes of fertilization, pregnancy, and childbirth.

Homeostasis

The ability of a living organism to maintain stable internal conditions despite changes in the external environment.

Circulatory System

The body's system responsible for the transport of blood, nutrients, gases, and wastes throughout the body, involving the heart and blood vessels.

Surface-Area-To-Volume Ratio

Ratio of a cell’s outside area to its internal volume; the relationship limits the maximum size of a cell.