D P E WACC = Fid(1 T.) + :ipt D+P+E LE D+P+E D+P + E The following questions refer to the WACC formula above. lowing ques What is D? a) Book value of debits c) Book value of debt b) Market Value of debits d) Market value of debt What is id? Select two true statements. a) Pre-tax cost of debt c) Average coupon on debt b) After-tax cost of debt d) Average YTM on debt b) Because the cost of debt to a company is a "total cost (Tc) and we adjust for total cost. Why do we multiply by (1-Tc)? a) Because the cost of debt to a company is an expense, is therefore tax-deductible, and we concern ourselves with the after-tax cost of capital. c) Because the cost of debt is much lower than the cost of equity, so we have to gross it up by "total cost" (TC). d) Because... math