Corporation tax rate-tax weighted average cost of capital

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Reference no: EM13828727

For le monde corporation, the costs of various types of capital are as follows:

Cost Weight:

Equity 12% 40%

Preferred stock 10% 20%

Debt 9% 40%

Given the corporation tax rate of 30% the before tax weighted average cost of capital for Le Monde is lower than its after tax WACC.

True, False, Uncertain?

Reference no: EM13828727

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