Rumolt Motors has 24 million shares outstanding with a price of $56 per share. In...
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Rumolt Motors has 24 million shares outstanding with a price of $56 per share. In addition, Rumolt has issued bonds with a total current market value of $1,485 million. Suppose Rumolt's equity cost of capital is 12%, and its debt cost of capital is 8%. a. What is Rumolt's pretax weighted average cost of capital? b. If Rumolt's corporate tax rate is 21%, what is its after-tax weighted average cost of capital? a. What is Rumolt's pretax weighted average cost of capital? Rumolt's pretax weighted average cost of capital is %. (Round to two decimal places.)
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