Difference in weighted-average cost of capital-pre-tax wacc

Assignment Help Financial Management

Reference no: EM13885473

The difference between the weighted-average cost of capital (WACC) and the pre-tax (unlevered) WACC is

A. the weighted-average cost of capital multiplies the cost of debt by (1-tax rate) and the pre-tax WACC does not.

B. 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.

C. 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.

D. 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.

Reference no: EM13885473

Questions Cloud

What did these bonds sell for when they were issued : Seven years ago XYZ International issued some 31-year zero-coupon bonds that were priced with a market's required yield to maturity of 12 percent and a par value of $1,000. What did these bonds sell for when they were issued?

Includes bonds-preferred stock and common stock : Hardy Lumber has a capital structure which includes bonds, preferred stock, and common stock. Which of the following rights have most likely been granted to the preferred shareholders?

Shareholders are happy with the existing management : Which of the following can cause a project to have multiple IRRs? The project has a large initial outlay. B) A ten-year project requires an initial investment and has a negative cash flow in the last year of the project's life. Which one of the follo..

Cause a project to have multiple irrs : Which of the following can cause a project to have multiple IRRs?

Difference in weighted-average cost of capital-pre-tax wacc : The difference between the weighted-average cost of capital (WACC) and the pre-tax (unlevered) WACC is

About the liquidity ratio : Josh Smith has compiled some of his personal financial data in order to determine his liquidity position. Calculate Josh’s liquidity ratio. Several of Josh’s friends have told him that they have liquidity ratios of about 1.8. How would you analyze Jo..

Calculating mutually exclusive projects : Trail Guides, Inc., is currently evaluating two mutually exclusive investment. After doing a scenario analysis and applying probabilities to each scenario, they have determined that the investments have the following distributions around the expected..

Stock prices of the banned stocks in the ban period : On the other hand, Nguyen and Tang (2009) find that- The 2008 short-sale ban has a ________ (positive or negative or no) impact on the stock prices of the banned stocks in the ban period.

Maturity equal to our investment horizon : U.S. Treasuries are never subject to interest rate risk unless we select a maturity equal to our investment horizon. Many practitioners analyze other financial characteristics of a firm, when they forecast betas. When using historical returns to fore..

User Account

All Pages