The Difference Between the Weighted-Average Cost of Capital (WACC)and the Pre-Tax

The difference between the weighted-average cost of capital (WACC) and the pre-tax (unlevered) WACC is:

A) the weighted-average cost of capital is based on the after-tax cost of equity and the pre-tax WACC is based on the after-tax cost of debt.
B) the weighted-average cost of capital multiplies the cost of equity and the cost of debt by (1-tax rate) and the pre-tax WACC does not.
C) the weighted-average cost of capital multiplies the cost of debt by (1-tax rate) and the pre-tax WACC does not.
D) the weighted-average cost of capital multiplies the component costs of equity and debt by their weight in the capital structure,and the pre-tax WACC does not.

Correct Answer:

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