Calculate the After-Tax WACC Based on the Following Information:nominal Interest

question 8

Multiple Choice

Calculate the after-tax WACC based on the following information:nominal interest rate on debt = 12%; cost of common equity = 25%; common equity = $700,000; interest-bearing debt = $300,000; and a tax rate = 25%.

• A)15%
• B)16.4%
• C)20.2%
• D)22.8%
• E)30%

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Definitions:

Inventory Overstatement

The act of reporting more inventory than is actually present, which can lead to inaccurately inflated assets and financial statements.

Relies

To depend on with full trust or confidence.

Professional Gambling

The act of wagering money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money or material goods professionally.

Dependent

Typically refers to someone who relies on another, especially for financial support, such as a child or spouse supported by a family's primary earner.