Question
Rogot Instruments makes fine violins and cellos. It has $1.8 million in debt outstanding, equity valued at $2.6 million, and pays corporate income tax at
Rogot Instruments makes fine violins and cellos. It has $1.8 million in debt outstanding, equity valued at $2.6 million, and pays corporate income tax at rate 37%. Its cost of equity is14% and its cost of debt is 8%.
a. What is Rogot's pre-tax WACC?
b. What is Rogot's (effective after-tax) WACC?
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Financial Markets And Institutions
Authors: Anthony Saunders, Marcia Cornett
7th Edition
1259919714, 978-1259919718
