What will be its wacc with the increase in leverage

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Reference no: EM131560514

NatNah, a builder of acoustic accessories has no debt and an equity cost of capital of 16%. Suppose NaiNah decides to increase is leverage to maintain a market debt-to-value ratio of 0.5. Suppose its debt cost of capital is 7% and is corporate tax rate is 35%. 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 be %. (Round to two decimal places.)

Reference no: EM131560514

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