Item$16$

$5\mathrm{.}26$points

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Item $16$

TB MC Qu$.13-30$ When computing WACC, an analyst should use...

When computing WACC, an analyst should use the:

Multiple Choice

pretax cost of debt because most corporations pay taxes at the same tax rate.

pretax cost of debt because it is the actual rate the firm is paying its bondholders.

current yield because it is based on the current market price of debt.

aftertax cost of debt because interest is partially, if not fully, tax deductible.

pretax yield to maturity because it considers the current market price of debt.