Rogot Instruments makes fine violins and cellos. It has $1.8 million in debt outstanding, equity valued at $2.9 million, and pays corporate income tax at rate 25%. Its cost of equity is 11% and its cost of debt is 5%. a. What is Rogot's pretax WACC? b. What is Rogot's (effective after-tax) WACC?

Rogot Instruments makes fine violins and cellos. It has $1.8 million in debt outstanding, equity valued at $2.9 million, and pays corporate income tax at rate 25%. Its cost of equity is 11% and its cost of debt is 5%. a. What is Rogot's pretax WACC? b. What is Rogot's (effective after-tax) WACC?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 3P

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Rogot Instruments makes fine violins and cellos. It has $1.8 million in debt outstanding, equity
valued at $2.9 million, and pays corporate income tax at rate 25%. Its cost of equity is 11% and
its cost of debt is 5%.
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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