When determining a firm's weighted average cost of capital (wacc)which of the following terms is NOT necessary?
A) the firm's tax rate
B) the firm's cost of debt
C) the firm's cost of equity
D) All of the above are necessary.

Question

Quizplus · Accepted Answer

All three components - tax rate, cost of debt, and cost of equity - are necessary to calculate WACC as it is a weighted average of the two sources of financing (debt and equity) taking into account their respective costs and proportions in the capital structure.

When Determining a Firm's Weighted Average Cost of Capital (Wacc)which