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Weighted-average cost of capital and the pre-tax wacc

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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 cost of equity and 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.

Reference no: EM131575605

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