Which of the following statements is most correct?
A) The WACC is a measure of the before-tax cost of capital.
B) Typically the after-tax cost of debt financing exceeds the after-tax cost of equity financing.
C) The WACC measures the marginal after-tax cost of capital.
D) Statements a and b are correct.
E) Statements b and c are correct.

Question

Quizplus · Accepted Answer

The WACC (Weighted Average Cost of Capital) measures the marginal after-tax cost of capital, reflecting the average rate a company expects to pay to finance its assets, considering the tax shield on debt.

Which of the Following Statements Is Most Correct