Calculate the After-Tax WACC Based on the Following Information: Nominal

question 59

Multiple Choice

Calculate the after-tax WACC based on the following information: nominal interest rate on debt = 16%; cost of common equity = 30%; equity to value = 60%; debt to value = 40%; and a tax rate = 25%.

• A) 10%
• B) 16%
• C) 19.8%
• D) 22.8%
• E) 30%

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Definitions:

Entry

A record in an account that documents a financial transaction in bookkeeping.

Special Journals

Customized accounting journals used for recording specific types of transactions that occur frequently.

General Journal

A primary accounting record where all types of financial transactions are initially recorded in chronological order before being posted to specific accounts in the general ledger.

Cash Receipts Journal

A specific financial journal used in accounting to record all cash inflows to a business.