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Consider the Following Equation

Question 5

Multiple Choice

Consider the following equation:
Rwacc = Consider the following equation: R<sub>wacc</sub> = R<sub>E</sub> + R<sub>D</sub>(1 - τ<sub>c</sub>) The term r<sub>E</sub> in this equation is: A) the after tax required rate of return on debt. B) the required rate of return on debt. C) the required rate of return on equity. D) the dollar amount of equity.
RE + Consider the following equation: R<sub>wacc</sub> = R<sub>E</sub> + R<sub>D</sub>(1 - τ<sub>c</sub>) The term r<sub>E</sub> in this equation is: A) the after tax required rate of return on debt. B) the required rate of return on debt. C) the required rate of return on equity. D) the dollar amount of equity.
RD(1 - τc)
The term rE in this equation is:


A) the after tax required rate of return on debt.
B) the required rate of return on debt.
C) the required rate of return on equity.
D) the dollar amount of equity.

Correct Answer:

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