When calculating the weighted average cost of capital, which of the following has to be adjusted for taxes?

Question

Quizplus · Accepted Answer

Debt has to be adjusted for taxes because interest paid on debt is tax-deductible, which lowers the cost of debt. The other options (common stock, retained earnings, and preference shares) are not tax deductible, so there is no need to adjust for taxes when calculating the weighted average cost of capital.

When Calculating the Weighted Average Cost of Capital, Which of the Following