Which of the following best reflects the correct cost of debt used to calculate a firm's WACC?
A) The before-tax cost of debt, which is higher than the after-tax cost, is used as the component cost of debt for purposes of developing the firm's WACC.
B) The after-tax cost of debt, which is higher than the after-tax cost, is used as the component cost of debt for purposes of developing the firm's WACC.
C) The before-tax cost of debt, which is lower than the after-tax cost, is used as the component cost of debt for purposes of developing the firm's WACC.
D) The after-tax cost of debt, which is lower than the after-tax cost, is used as the component cost of debt for purposes of developing the firm's WACC.
Correct Answer:
Verified
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