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Part $1$

The difference between the

weightedminus$$average

cost of capital$($WACC$)$ and the

preminus$$tax

$($unlevered$)$ WACC$$ is:

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Part $1$

A$.$

the

weightedminus$$average

cost of capital is based on the

afterminus$$tax

cost of equity and the

preminus$$tax

WACC is based on the

afterminus$$tax

cost of debt.

B$.$

the

weightedminus$$average

cost of capital multiplies the cost of equity and the cost of debt by

$(1$minus$$tax

$$rate$)$ and the

preminus$$tax

WACC does not.

C$.$

the

weightedminus$$average

cost of capital multiplies the component costs of equity and debt by their weight in the capital$$ structure, and the

preminus$$tax

WACC does not.

D$.$

the

weightedminus$$average

cost of capital multiplies the cost of debt by

$(1$minus$$tax

$$rate$)$ and the

preminus$$tax

WACC does not.