Question
Rumolt Motors has 38 million shares outstanding with a share price of $25 per share. In addition, Rumolt has issued bonds with a total current
Rumolt Motors has 38 million shares outstanding with a share price of $25 per share. In addition, Rumolt has issued bonds with a total current market value of 1,345 million. Suppose Rumolt's equity cost of capital is 9%, and its debt cost of capital is 5%.
a. What is Rumolt's pre-tax WACC?
b. If Rumolt's corporate tax rate is 40%, what is its after-tax WACC?
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Financial Accounting The Impact On Decision Makers
Authors: Gary A Porter, Curtis L Norton
7th Edition
1439080526, 9781439080528
