Question
Rumolt Motors has 60 million shares outstanding with a share price of 34 per share. In addition, Rumolt has issued bonds with a total current
Rumolt Motors has 60 million shares outstanding with a share price of 34 per share. In addition, Rumolt has issued bonds with a total current market value of 3,022 million. Suppose Rumolt's equity cost of capital is 10%, 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 Management Theory And Practice
Authors: Prasanna Chandra
8th Edition
0071078401, 978-0071078405
