Why should the debt portion of the WACC be adjusted for tax?

A) Because the interest paid on debt is not taxable at the firm level
B) Because the interest paid on debt is not taxable at the investor level
C) Because all components of the WACC are not taxable
D) Because the principle paid on the debt is not taxable at the firm level

WACC

The Weighted Average Cost of Capital represents a computation that determines a company's capital costs, with each type of capital being weighted according to its proportion.

Tax Adjustment

Modifications made to income or tax liability due to deductions, exemptions, and credits to comply with tax regulations or to benefit from them.

Interest Paid

The amount of money paid by a borrower to a lender in exchange for the use of borrowed money.