Which of the following statements regarding the weighted, Ask an Expert

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Which of the following statements regarding the weighted average cost of capital (WACC) is correct?

A. The WACC used to evaluate capital budgeting projects is a historical, before-tax cost of capital.

B. Target capital structure changes do not affect the WACC; only changes to the component costs themselves do.

C. The WACC represents the cost of all the capital that the firm has already raised to acquire its assets.

D. Retained earnings are not costless because they have an opportunity cost.

E. The cost of preferred stock is adjusted for taxes.

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