Which of the following is NOT a key variable in the weighted average cost of capital (WACC) equation?
A) the before-tax cost of debt
B) the risk-adjusted cost of equity
C) the beta of the market portfolio
D) the total market value of the firm's securities

Question

Quizplus · Accepted Answer

The beta of the market portfolio is not a key variable in the WACC equation. The key variables are the before-tax cost of debt, the risk-adjusted cost of equity, and the total market value of the firm's securities. The beta of the market portfolio may be used to calculate the risk-adjusted cost of equity, but it is not a variable in the WACC equation itself.

Which of the Following Is NOT a Key Variable in the Weighted