The WACC is determined from two separate calculations, one based on the cost of equity and the other on the cost of debt. The 'cost of debt' calculation can take into account the tax rate. The whole calculation uses five variables, and the tax rate serves to reduce the 'cost of debt' percentage. The bigger the tax rate, the greater the impact on the cost of debt. The lower the tax rate, the smaller the impact. However, as there are five variables in the whole calculation, and the sums, magnitude and significance will differ from company to company, the only way to determine the impact of tax rates (marginal or otherwise) in a particular case is to do comparative calculations of WACC, one with, and the other without the tax rate element. By calculating the difference between the two results, one can determine the precise impact/significance of including/excluding tax considerations when calculating WACC for a particular corporate scenario. In a company with a large cost of debt and a small cost of equity, the effect of the rate of tax (in the WACC calculation) will be higher than that in a company with a high cost of equity and a low cost of debt. In other words, the relative weighting of the 'cost of debt' against the 'cost of equity' is an important influencing element in the WACC computation. N.B. When calculating WACC, the 'after-tax' percentage (i.e. with due allowance for the tax rate,) is generally considered to be a better indicator of the true WACC for a particular company than omitting tax liabilities entirely from the calculations.
Who is your role model?
Did Bill Nye go to jail?
Is 0.09 greater than 0.1?
How do you get 1000000 robux for free?
What is the adverb in the sentence she slept late on Tuesday morning?
What 5 players averaged 20 points and 20 rebounds for their ncaa career?
in Tuck Everlasting What is the plan for Winnie for the next few days?
How many minutes does it take to walk 50 yards?
What should I know about coronavirus?
How many stars are in the Big Dipper?
What is the one food you could eat for the rest of your life?
What does a red flag mean on the beach?
What's the weirdest state symbol?
What is OK short for?
Is it possible to die of a broken heart?
How did they decide the point value of Scrabble letters?
Does jimmy capps have children
What is the meaning of recompense injury with justice and recompense kindness with kindness
What are the similarities between ancient and modern maps
Who is the woman in the pcmatic commercial
What is meant by the statement that training is extremely faddish
What was common in eastern block nations
Are Steve Harvey and pat Harvey related