medium · Principles of Finance cost-of-capital-structure

Which firm would likely have the highest WACC, assuming identical costs of debt and equity and identical weights?

  1. A firm with large tax credits that reduce its effective rate to 5%.
  2. A firm in a moderate-tax jurisdiction (20%).
  3. A firm operating in a tax-free jurisdiction.
  4. A firm in a high-tax jurisdiction (40%).

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