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:

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C)r_WACC= 11ea7cce_3ce0_bd96_928c_2f569dfbb496_TB1626_11 r_{e +} 11ea7cce_3ce0_e4a7_928c_592503f15756_TB1626_11 r_{d -} 11ea7cce_3ce0_e4a8_928c_a5e252659a27_TB1626_11 r_dT_e= 16% - 11ea7cce_3ce0_e4a9_928c_25a6143b337f_TB1626_11 (9%)(35%)= 14.95% Note that = 11ea7cce_3ce1_0bba_928c_931f2739e928_TB1626_11 r_{e +} 11ea7cce_3ce1_0bbb_928c_57116d7da193_TB1626_11 r_d is the pre-tax WACC.

Taggart Transcontinental Currently Has No Debt and an Equity Cost