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Rumolt Motors has 67 million shares outstanding with a price of $55 per share. In addition, Rumolt has issued bonds with a total current market
Rumolt Motors has 67 million shares outstanding with a price of $55 per share. In addition, Rumolt has issued bonds with a total current market value of $3,409 million. Suppose Rumolt's equity cost of capital is 9%, and its debt cost of capital is 6%. a. What is Rumolt's pretax weighted average cost of capital? b. If Rumolt's corporate tax rate is 21%, what is its after-tax weighted average cost of capital
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