Which of the formulations below expresses the weighted average cost of capital (WACC)formula? A)WACC = $\frac { E } { V }$ × R_e+ $\frac { D } { V }$ × R_d× (1 - T_c) B)WACC = $\frac { D } { V }$ × R_e+ $\frac { E } { V }$ × R_{d ×}(1 - T_c) C)WACC = $\frac { E } { V }$ × R_{e ×}(1 - T_c)+ $\frac { D } { V }$ × R_d D)WACC = $\frac { E } { V }$ × R_d+ $\frac { D } { V }$

Question

Quizplus · Accepted Answer

The correct formula for WACC is $WACC = \frac { E } { V }$ × Re + $\frac { D } { V }$ × Rd × (1 - Tc), where E is the market value of the equity, D is the market value of the debt, V is the total market value of the firm's financing (E + D), Re is the cost of equity, Rd is the cost of debt, and Tc is the corporate tax rate. Choice A is the closest representation of this formula, despite the formatting errors.

Which of the Formulations Below Expresses the Weighted Average Cost EV\frac { E } { V }VE​

Which of the Formulations Below Expresses the Weighted Average Cost $\frac { E } { V }$