Question
Rogot Instruments makes fine violins and cellos. It has $1.1 million in debt outstanding, equity valued at $3.6 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 $3.6 million, and pays corporate income tax at rate 24%. Its cost of equity is 13% and its cost of debt is 7%.
a. What is Rogot's pre-tax WACC?
b. What is Rogot's (effective after-tax) WACC?
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The Finance Book
Authors: Stuart Warner, Si Hussain
2nd Edition
1292401982, 978-1292401980
