1. Market values are calculated period by period and they are the present value at WACC of the future cash flows.
2. These values to calculate D% and E% are located at the beginning of period t, where the WACC belongs. From here on, the right notation will be used.
3. d(1-T) implies that the tax payments coincides in time with the interest payments. (Some firms could present this payment
behavior, but it is not the rule. Only those that are subject to tax withheld from their customers, pay taxes as soon as they pay interest charges).