Rogot Instruments makes fine violins and cellos. It has $1.0 million in debt outstanding, equity valued at $2.0 million and pays corporate income tax at rate 21%. Its cost of equity is 12% and its cost of debt is 7%. a. What is Rogot's pretax WACC? b. What is Rogot's (effective after-tax) WACC? ..... a. What is Rogot's pretax WACC? Rogot's pretax WACC is %. (Round to two decimal places.)

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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Rogot Instruments makes fine violins and cellos. It has $1.0 million in debt outstanding, equity valued at $2.0 million
and pays corporate income tax at rate 21%. Its cost of equity is 12% and its cost of debt is 7%.
a. What is Rogot's pretax WACC?
b. What is Rogot's (effective after-tax) WACC?
.....
a. What is Rogot's pretax WACC?
Rogot's pretax WACC is
%. (Round to two decimal places.)
Transcribed Image Text:Rogot Instruments makes fine violins and cellos. It has $1.0 million in debt outstanding, equity valued at $2.0 million and pays corporate income tax at rate 21%. Its cost of equity is 12% and its cost of debt is 7%. a. What is Rogot's pretax WACC? b. What is Rogot's (effective after-tax) WACC? ..... a. What is Rogot's pretax WACC? Rogot's pretax WACC is %. (Round to two decimal places.)
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