Pelamed Pharmaceuticals had EBIT of$430million in2018.In addition, Pelamed had interest expenses of$152.11million and a corporate tax rate of22%.

a. What is Pelamed's2018net income?

b. What is the total of Pelamed's 2018 net income plus interest payments?

c. If Pelamed had no interest expenses, what would have been its 2018 net income? How does it compare to your answer in part (a)?

d. What is the amount of Pelamed's interest tax shield in 2018?

Rogot Instruments makes fine violins, violas, and cellos. It has$1.2million in debt outstanding, equity valued at$2.8

million, and pays corporate income tax at rate 22%.Its cost of equity is14%and its cost of debt is 5%.

a. What is Rogot's pre-tax WACC?

b. What is Rogot's (effective after-tax) WACC?

Summit Builders has a market debt-equity ratio of 0.25, a corporate tax rate of 22%, and pays 9% interest on its debt. By what amount does the interest tax shield from its debt lower Summit's WACC?