$$X = \frac { E } { E + D } r _ { E } + \frac { D } { E + D } r _ { D }$$ can be used to calculate all of the following EXCEPT:

Name: \[X = \frac { E } { E + D } r _ { E } + \frac { D } { E + D } r _ { D }\] can be used to calculate all of the following EXCEPT:
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Question

Quizplus · Accepted Answer

The formula provided is used to calculate the weighted average cost of capital (WACC), which is the cost of capital for the firm's assets. It cannot be used to calculate the levered cost of equity, which requires a different formula.

X=EE+DrE+DE+DrDX = \frac { E } { E + D } r _ { E } + \frac { D } { E + D } r _ { D }X=E+DE​rE​+E+DD​rD​

$X = \frac { E } { E + D } r _ { E } + \frac { D } { E + D } r _ { D }$