When computing the weighted average cost of capital, which of these are adjusted for taxes?

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June 24, 2018
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June 24, 2018

When computing the weighted average cost of capital, which of these are adjusted for taxes?

When computing the weighted average cost of capital, which of these are adjusted for taxes?

Q1When computing the weighted average cost of capital, which of these are adjusted for taxes?A) the costs of all forms of financingB) cost of equityC) both the cost of equity and the cost of preferred stockD) cost of preferred stockE) cost of debtQ2A firms WACC can be correctly used to discount the expected cash flows of a new project when that project:A)will be financed with the same proportions of debt and equity as those currently used by the overall firm.B) will be managed by the firms current managers.C) will be financed solely with new debt and internal equity.D) has the same level of risk as the firms current operations.E) will be financed solely with internal equity.Q3An independent investment is acceptable if the profitability index (PI) of the investment is:A) greater than the internal rate of return.B) less than one.C) greater than a pre-specified rate of return.D) greater than one.E) less than the internal rate of return.