Which of the Following Regarding the Weighted-Average Cost of Capital

question 32

Multiple Choice

Which of the following regarding the weighted-average cost of capital is true?

• A) The tax effect of preferred stock dividends should be included in the calculation of weighted-average cost of capital.
• B) The tax effect of common stock dividends should be included in the calculation of weighted-average cost of capital.
• C) The tax effect of debt should be included in the calculation of the weighted-average cost of capital.
• D) Taxes do not affect the weighted-average cost of capital.

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Definitions:

Efficiency

The extent to which resources are used in the best possible way to produce goods and services.

Labor Turnover

The rate at which employees leave a company and are replaced by new employees, often used as a measure of a company's stability and employee satisfaction.

Voice Mechanisms

Methods or processes through which opinions, feedback, or preferences are expressed and communicated in a decision-making context.

Exit Mechanisms

Strategies or methods used by investors, entrepreneurs, or organizations to withdraw their stake from an investment or business venture.