Which of the following best defines the cost of debt component of the WACC?
A) The cost of debt component of the WACC is equal to 1 minus the marginal tax rate multiplied by the average coupon rate on all outstanding debt.
B) The cost of debt component of the WACC is equal to 1 minus the marginal tax rate multiplied by the yield-to-maturity on the firm's outstanding debt.
C) The cost of debt component of the WACC is equal to 1 plus the marginal tax rate multiplied by the average coupon rate on all outstanding debt.
D) The cost of debt component of the WACC is equal to 1 minus the marginal tax rate multiplied by the average duration on all outstanding debt.
Correct Answer:
Verified
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