To determine a firm's WACC, it is necessary to compensate for the effect of:

A) transaction costs associated with doing business in financial markets.
B) the tax implications of debt.
C) None of the above
D) Both a and b

Transaction Costs

Expenses incurred when buying or selling goods and services, which can include fees, taxes, and other charges.

Tax Implications

The effect that various financial decisions have on one's tax liability, including income generation, investments, and deductions.