The capital structure of Robinson Inn is current at 60% of equity (i.e., 40% of the debt).
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Question:
The capital structure of Robinson Inn is current at 60% of equity (i.e., 40% of the debt). You find the debt issued by Robinson Inn has a pretax interest rate of 12%. You also find Robinson Inn issues its common stocks at $15.00 per share, with the current dividend of $1.00. You expect future dividends of Robinson Inn to grow by 4%.
Question: what is Robinson Inn's WACC if it pays taxes at 21%?
Expert Answer:
To calculate Robinson Inns weighted average cost of capital WACC we need to consider the co... View the full answer
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