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Rogot Instruments makes fine violins and cellos. It has $1.6 million in debt outstanding, equity valued at $2.5 million and pays corporate income tax at
Rogot Instruments makes fine violins and cellos. It has $1.6 million in debt outstanding, equity valued at $2.5 million and pays corporate income tax at rate 21%.
Its cost of equity is 10% 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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