Question
NatNah, a builder of acoustic accessories, has no debt and an equity cost of capital of 13%. Suppose NatNah decides to increase its leverage to
NatNah, a builder of acoustic accessories, has no debt and an equity cost of capital of 13%. Suppose NatNah decides to increase its leverage to maintain a market debt-to-value ratio of 0.6 . 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?
The effective after-tax WACC will ____ your response here.
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Personal Finance For Dummies
Authors: Eric Tyson
9th Edition
1119517893, 978-1119517894
