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Rumolt Motors has 45 million shares outstanding with a share price of $ 48 per share. In addition, Rumolt has issued bonds with a total
Rumolt Motors has 45 million shares outstanding with a share price of $ 48 per share. In addition, Rumolt has issued bonds with a total current market value of $ 3 comma 075 million. Suppose Rumolt's equity cost of capital is 12 % , and its debt cost of capital is 8 % . a. What is Rumolt's pre-tax WACC? b. If Rumolt's corporate tax rate is 35 % , what is its after-tax WACC?
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