Rumolt Motors has 58 million shares outstanding with a price of $26 per share. In addition, Rumolt

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Rumolt Motors has 58 million shares outstanding with a price of $26 per share. In addition, Rumolt has issued bonds with a total current market value of $991 million.

Suppose Rumolt’s equity cost of capital is 14%, and its debt cost of capital is 7%.

a. What is Rumolt’s pretax WACC?

b. If Rumolt’s corporate tax rate is 30%, what is its after-tax WACC?

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Fundamentals Of Corporate Finance

ISBN: 9781292437156

5th Global Edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

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Question Posted: Feb 21, 2024 10:00 AM

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Rumolt Motors has 58 million shares outstanding with a price of $26 per share. In addition, Rumolt

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Fundamentals Of Corporate Finance

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