Rumolt Motors has

35

million shares outstanding with a price of

$14

per share. In addition, Rumolt has issued bonds with a total current market value of

$521

million. Suppose Rumolt's equity cost of capital is

10%,

and its debt cost of capital is

5%.

a. What is Rumolt's pretax weighted average cost of capital?

b. If Rumolt's corporate tax rate is

21%,

what is its after-tax weighted average cost of capital?

a. What is Rumolt's pretax weighted average cost of capital?

Rumolt's pretax weighted average cost of capital is

nothing%.

(Round to two decimal places.)