Question
Root KNL makes fine endodontic equipment and supplies. It has $1 million in debt outstanding, equity valued at $2 million, and pays corporate income tax
Root KNL makes fine endodontic equipment and supplies. It has $1 million in debt outstanding, equity valued at $2 million, and pays corporate income tax at a rate of 35%. Its cost of equity is 12% and its cost of debt is 6%. Roots pretax WACC (ru) and (effective after-tax) WACC are?
| a. | 10.0%; 9.3% | |
| b. | 6.6%; 8.0% | |
| c. | 8.0%; 6.6% | |
| d. | 10.0%; 8.70% |
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Volatility Trading
Authors: Euan Sinclair
2nd Edition
1118347137, 9781118347133
