Question
Rumolt Motors has 55 million shares outstanding with a share price of $ 51 per share. In addition, Rumolt has issued bonds with a total
Rumolt Motors has 55 million shares outstanding with a share price of $ 51 per share. In addition, Rumolt has issued bonds with a total current market value of $ 2 comma 929 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? round to 2 decimal places.
b. If Rumolt's corporate tax rate is 40 %, what is its after-tax WACC?
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Personal Finance Version 3.1
Authors: Rachel S. Siegel
3rd Edition
1453334807, 978-1453334805
