Suppose rumolts equity cost of capital is 11 and its debt


Rumolt Motors has 51 million shares outstanding with a share price of $13 per share. In? addition, Rumolt has issued bonds with a total current market value of $518 million. Suppose? Rumolt's equity cost of capital is 11%?, and its debt cost of capital is 8%.

a. What is? Rumolt's pre-tax? WACC?

b. If? Rumolt's corporate tax rate is 35%?, what is its? after-tax WACC?

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Financial Management: Suppose rumolts equity cost of capital is 11 and its debt
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