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Rumolt Motors has 16 million shares outstanding with a share price of $22 per share. In addition, Rumolt has issued bonds with a total current
Rumolt Motors has 16 million shares outstanding with a share price of $22 per share. In addition, Rumolt has issued bonds with a total current market value of $270 million. Suppose Rumolt's equity cost of capital is 15%, and its debt cost of capital is 6%. a. What is Rumolt's pre-tax WACC? b. If Rumolt's corporate tax rate is 35%, what is its after-tax WACC? Rr. a. What is Rumolt's pre-tax WACC? Rumolt's pre-tax WACC is %. (Round to two decimal places.) b. If Rumolt's corporate tax rate is 35%, what is its after-tax WACC? Rumolt's after-tax WACC is %. (Round to two decimal places.)
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