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    Principles of Corporate Finance Study Set 3
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    Exam 9: Risk and the Cost of Capital
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    One Calculates the Weighted Average Cost of Capital (WACC), on an After-Tax
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One Calculates the Weighted Average Cost of Capital (WACC), on an After-Tax

Question 32

Question 32

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One calculates the weighted average cost of capital (WACC), on an after-tax basis, as WACC = (rD)(1 − TC )(D/V)+ (rE)(E/V), where V = D + E.

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