Consider the Following Formula

question 53

Multiple Choice

Consider the following formula:
R_wacc =
R_E +
R_D -
R_Dτ_c
The term
R_Dτ_c represents:

• A)the reduction due to the interest tax shield.
• B)the present value of the interest tax shield.
• C)the preset value of the future interest payments.
• D)the interest tax shield each year.

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