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Please explain in a paragraph why options C, D, and E are the incorrect answers. Thanks 13. Which one of the following statements is true
Please explain in a paragraph why options C, D, and E are the incorrect answers.
Thanks
13. Which one of the following statements is true about calculating a WACC? a. The required return on debt is multiplied by T in the WACC calculation because interest income is taxable to investors. b. The book value of long-term debt is a good proxy for its market value if interest rates haven't changed much since the bonds were issued. c. An estimate of the firm's bonds' beta is needed to calculate a required return on debt. d. A bond's coupon rate rather than its yield to maturity should be used for the required return on debt in the WACC calculation. e. Total annual dividends divided by the book value of equity is one of the accepted ways to calculate the required return on equity in the WACC calculationStep by Step Solution
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