Assume a company's cost of equity exceeds its pretax cost of debt.Given this assumption and assuming all else is held constant,the company's WACC must increase if the

Name: Assume a company's cost of equity exceeds its pretax cost of debt.Given this assumption and assuming all else is held constant,the company's WACC must increase if the
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Quizplus · Accepted Answer

A decrease in the tax rate reduces the tax shield on debt, effectively increasing the after-tax cost of debt, which in turn increases the WACC.

Assume a Company's Cost of Equity Exceeds Its Pretax Cost