Taggart Transcontinental Currently Has No Debt and an Equity Cost

question 27

Multiple Choice

Taggart Transcontinental currently has no debt and an equity cost of capital of 16%.Suppose that Taggart decides to increase its leverage and maintain a market debt-to-value ratio of 1/3.Suppose Taggart's debt cost of capital is 9% and its corporate tax rate is 35%.Assuming that Taggart's pre-tax WACC remains constant,then with the addition of leverage its effective after-tax WACC will be closest to:

• A)12.9%
• B)13.0%
• C)15.0%
• D)16.0%

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Definitions:

Transactional Selling

A sales approach focused on short-term transactions, emphasizing individual sales rather than building long-term relationships with customers.

Shelf Positioning

The physical placement of the product within the retailer’s store.

Point-Of-Purchase

The location or moment where a transaction takes place, often used in marketing to describe strategic placements of advertisements or promotions.

Sales Technology

Tools and software solutions designed to enhance the efficiency and effectiveness of sales processes, including customer relationship management (CRM) systems and sales automation tools.