Cost of mortgages and bonds are always calculated on a before-tax basis when calculating the weighted average cost of capital.

Question

Quizplus · Accepted Answer

The cost of debt (including mortgages and bonds) is typically calculated on an after-tax basis when calculating the weighted average cost of capital (WACC) because interest expenses are tax-deductible, reducing the net cost of debt to the company.

Cost of Mortgages and Bonds Are Always Calculated on a Before-Tax