A4. (WACC with Rebalancing)
Corporate Financial Management (3rd Edition)
Emery, Douglas R., Finnerty, John D., & Stowe, John D. (2007)
Individual assignment: Text Problem Set IV:
Chapter 17, Problems
A4. (WACC with Rebalancing) Nathan's Catering is a gourmet catering service located in Southampton, New York. It has an unleveraged required return of r = 43%. Nathan's rebalances its capital structure each year to a target of L = 0.52. T * = 0.20. Nathan's can borrow currently at a rate of rd = 26%. What is Nathan's WACC?
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