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Rogot Instruments makes fine violins and cellos. It has $ 1.3$1.3 million in debt outstanding, equity valued at $ 2.5$2.5 million, and pays corporate income
Rogot Instruments makes fine violins and cellos. It has
$ 1.3$1.3
million in debt outstanding, equity valued at
$ 2.5$2.5
million, and pays corporate income tax at rate
30 %30%.
Its cost of equity is
10 %10%
and its cost of debt is
8 %8%.
a. What is Rogot's pre-tax WACC?
b. What is Rogot's (effective after-tax) WACC?
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