Given the role of the finance manager is to maximise the value of their company,when calculating a WACC the finance manager should focus on which of the following?

Question

Quizplus · Accepted Answer

The finance manager should focus on the after-corporate tax returns when calculating WACC because this represents the cost of capital that the company will actually have to pay out. Maximizing company value means minimizing costs, so choosing the after-corporate tax return option will lead to a more accurate calculation and lower cost of capital for the company. Option A (before-corporate tax returns) does not take into account the tax benefits of debt, while option B (after personal tax returns) is not relevant to the company's overall cost of capital.

Given the Role of the Finance Manager Is to Maximise