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For the scenarios above, TTC wants to evaluate their WACC on a pretax and after-tax basis. The company has a tax rate of 35%. What
For the scenarios above, TTC wants to evaluate their WACC on a pretax and after-tax basis. The company has a tax rate of 35%.
What will be the WACC for each situation outlined in the previous scenario?
After stock issuance to pay off debt Pre-Tax WACC Rwacc = [E/(E+D)]*Re + [D/(E+D)*Rd pg 532 After Tax WACC Rwacc = [E/(E+D)]*Re + [D/(E+D)*Rd*(1-tax rate) pg 532
After increase of debt to repurchase shares Pre-Tax WACC Rwacc = [E/(E+D)]*Re + [D/(E+D)*Rd pg 532 After Tax WACC Rwacc = [E/(E+D)]*Re + [D/(E+D)*Rd*(1-tax rate) pg 532
With Excel formulas
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