When we calculate WACC what is 1t stand for Points 5 The cos

When we calculate WACC, what is (1-t) stand for? (Points: 5) The cost of debt and equity go down as much as the tax amount because they are tax deductible Taxes are reduced by the amount of the interest for debt Taxable income is reduced by the amount of the debt. Taxable income is reduced by the amount of the interest OCost of debt and equity are not taxed

Solution

Taxable income is reduced by the amount of the interest

(equity does not provide tax exemption)