Question
Rumolt Motors has 46 million shares outstanding with a share price of $44 per share. In addition, Rumolt has issued bonds with a total current
Rumolt Motors has 46 million shares outstanding with a share price of $44 per share. In addition, Rumolt has issued bonds with a total current market value of $630 million. Suppose Rumolt's equity cost of capital is 15%, and its debt cost of capital is 6%. a. What is Rumolt's pre-tax WACC? b. If Rumolt's corporate tax rate is 25%, what is its after-tax WACC? Question content area bottom Part 1 a. What is Rumolt's pre-tax WACC? Rumolt's pre-tax WACC is enter your response here%. (Round to two decimal places.) Part 2 b. If Rumolt's corporate tax rate is 25%, what is its after-tax WACC? Rumolt's after-tax WACC is enter your response here%. (Round to two decimal places.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started