Question
Rogot Instruments makes fine violins and cellos. It has $1.1 million in debt outstanding, equity valued at $2.8 million and pays corporate income tax at
Rogot Instruments makes fine violins and cellos. It has
$1.1
million in debt outstanding, equity valued at
$2.8
million and pays corporate income tax at rate
33 %
.
Its cost of equity is
12 %
and its cost of debt is
6 %
.
a. What is Rogot's pretax WACC?
b. What is Rogot's (effective after-tax) WACC?
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Financial Management
Authors: Geoffrey Knott
4th Edition
1403903824, 9781403903822
