Rumolt Motors has

35 million shares outstanding with a price of

$52 per share. Inaddition, Rumolt has issued bonds with a total current market value of

$804 million. SupposeRumolt's equity cost of capital is

11%, and its debt cost of capital is

6%.

a. What isRumolt's pretax weighted average cost ofcapital?

b. IfRumolt's corporate tax rate is 38 %

what is itsafter-tax weighted average cost ofcapital?