Suppose That Model Nails, Inc

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 21 percent, what will be Model Nails' WACC?

A) 7.90 percent
B) 6.84 percent
C) 8.40 percent
D) 16.00 percent