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Rumolt Motors has 3939 million shares outstanding with a price of $ 50$50 per share. In addition, Rumolt has issued bonds with a total current
Rumolt Motors has 3939 million shares outstanding with a price of $ 50$50 per share. In addition, Rumolt has issued bonds with a total current market value of $ 1 comma 801$1,801 million. Suppose Rumolt's equity cost of capital is 15 %15%, and its debt cost of capital is 11 %11%. a. What is Rumolt's pretax weighted average cost of capital? b. If Rumolt's corporate tax rate is 30 %30%, what is its after-tax weighted average cost of capital?
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