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Category > Accounting Posted 09 May 2017 My Price 4.00

Rumolt Motors has 30 million shares outstanding

 

Rumolt Motors has 30 million shares outstanding with a price of $15 per share. In addition, Rumolt has issued bonds with a total current market value of $150 million. Suppose Rumolt’s equity cost of capital is 10%, and its debt cost of capital is 5%.

a. What is Rumolt’s pretax weighted average cost of capital?

b. If Rumolt’s corporate tax rate is 35%, what is its after-tax weighted average cost of capital?

 

 
 

Answers

(8)
Status NEW Posted 09 May 2017 05:05 PM My Price 4.00

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file 1494349647-Answer.docx preview (108 words )
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