NatNah, a builder of acoustic accessories, has no debt and an equity cost of capital of 15%.
Question:
NatNah, a builder of acoustic accessories, has no debt and an equity cost of capital of 15%. NatNah decides to increase its leverage to maintain a market debt-to-value ratio of 0.5. Suppose its debt cost of capital is 9% and its corporate tax rate is 21%. If NatNah’s pretax WACC remains constant, what will be its (effective after-tax) WACC with the increase in leverage?
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Related Book For 
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
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