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NatNah, a builder of acoustic? accessories, has no debt and an equity cost of capital of 15%. Suppose NatNah decides to increase its leverage to

NatNah, a builder of acoustic? accessories, has no debt and an equity cost of capital of 15%. Suppose NatNah decides to increase its leverage to maintain a market? debt-to-value ratio of 0.5. Suppose its debt cost of capital is 8% and its corporate tax rate is 40%.

If? NatNah's pre-tax WACC remains? constant, what will be its? (effective after-tax) WACC with the increase in? leverage?

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