Suppose That Hanna Nails, Inc

question 113

Multiple Choice

Suppose that Hanna Nails, Inc.'s capital structure features 45 percent equity, 55 percent debt, and that its before-tax cost of debt is 5 percent, while its cost of equity is 9 percent. If the appropriate weighted average tax rate is 40 percent, what will be Hanna Nails' WACC?

• A)5.18 percent
• B)5.70 percent
• C)6.80 percent
• D)7.00 percent

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Definitions:

Defect Unexpectedly

A situation where a flaw or imperfection in a product or system appears without warning.

Warning Defect

A failure in a product to adequately instruct or inform users of potential risks or hazards, rendering it dangerous.

Manufacturer

An entity or individual that produces goods or products from raw materials through the use of labor, machinery, and equipment.

Obvious Risks

Hazards or dangers that are clear and recognizable to a reasonable person without the need for explicit warning.