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Rogot Instruments makes fine violins and cellos. It has $1.8 million in debt outstanding, equity valued at $2.5 million, and pays corporate income tax
Rogot Instruments makes fine violins and cellos. It has $1.8 million in debt outstanding, equity valued at $2.5 million, and pays corporate income tax at rate 25%. Its cost of equity is 12% and its cost of debt is 8%. a. What is Rogot's pretax WACC? b. What is Rogot's (effective after-tax) WACC? a. What is Rogot's pretax WACC? Rogot's pretax WACC is %. (Round to two decimal places.) b. What is Rogot's (effective after-tax) WACC? Rogot's (effective after-tax) WACC is %. (Round to two decimal places.)
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a Pret ax W ACC Deb t x Cost of Debt x 1 Tax Rate Equ ity x Cost of Equity 1 8 M x 8 x 1 25 2 5 ...
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Fundamentals of Corporate Finance
Authors: Berk, DeMarzo, Harford
2nd edition
132148234, 978-0132148238
