Suppose That Model Nails, Inc

question 117

Multiple Choice

Suppose that Model Nails, Inc.'s capital structure features 60 percent equity, 40 percent debt, and that its before-tax cost of debt is 6 percent, while its cost of equity is 10 percent. If the appropriate weighted average tax rate is 28 percent, what will be Model Nails' WACC?

• A)7.73 percent
• B)8.00 percent
• C)8.40 percent
• D)16.00 percent

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Definitions:

Aversive Events

Unpleasant or undesirable occurrences that an individual seeks to avoid or escape from.

Positive Reinforcement

A motivational strategy in which a positive stimulus is presented after a desired behavior, increasing the likelihood of future occurrences of that behavior.

Primary Reinforcer

A stimulus that meets a basic need or provides intrinsic satisfaction and therefore naturally encourages certain behaviors without the necessity of learning.

Reward

An incentive or benefit given for completing certain tasks or reaching certain goals, aimed at motivating further action or behavior.