Question: Please Show work and explain steps clearly and do not round Problem 17-21 Leverage and the cost of capital Omega Corporation has 11 _5 million

Problem 17-21 Leverage and the cost of capital Omega Corporation has 11

Please Show work and explain steps clearly and do not round

_5 million snares outstanding, now trading at $50 per snare. The firm

Problem 17-21 Leverage and the cost of capital Omega Corporation has 11 _5 million snares outstanding, now trading at $50 per snare. The firm has estimated the expected rate ot return to shareholders at about 15%. It has also issued $175 million ot long-term bonds at an interest rate ot It pays tax at a marginal rate ot 30%. a. What is Omega's after-tax WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Aner-tax WACC b. What would WACC be if Omega used no debt at all? (Hint: For this problem you can assume that the firm's overall beta is not affected by its capital structure or by the taxes saved because debt interest is tax-deductible.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) WACC

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