Question

Rumolt Motors has

7575

million shares outstanding with a share price of

$ 60$60

per share. In addition, Rumolt has issued bonds with a total current market value of

$ 4 comma 221$4,221

million. Suppose Rumolt's equity cost of capital is

10 %10%,

and its debt cost of capital is

7 %7%.

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

b. If Rumolt's corporate tax rate is

30 %30%,

what is its after-tax WACC?

Answer #1

Rumolt Motors has 38 million shares outstanding with a share
price of $ 43 per share. In addition, Rumolt has issued bonds with
a total current market value of $ 1 comma 975 million. Suppose
Rumolt's equity cost of capital is 14 %, and its debt cost of
capital is 5 %.
a. What is Rumolt's pre-tax WACC?
b. If Rumolt's corporate tax rate is 30 %, what is its
after-tax WACC?

17. Rumolt Motors has 25 million shares outstanding with a share
price of $28 per share. In addition, Rumolt has issued bonds with
a total current market value of $192 million. Suppose Rumolt's
equity cost of capital is 14%, and its debt cost of capital is
7%.
a. What is Rumolt's pre-tax WACC?
b. If Rumolt's corporate tax rate is 21%, what is its after-tax
WACC?

Rumolt Motors has 60 million shares outstanding with a share
price of $39 per share. In addition, Rumolt has issued bonds with
a total current market value of $3,073
million. Suppose Rumolt's equity cost of capital is 13%, and its
debt cost of capital is 9%.
a. What is Rumolt's pre-tax WACC?
b. If Rumolt's corporate tax rate is 30%, what is its
after-tax WACC?
A. answer for part a = 10.73%; answer for part b = 9.20%
B. answer...

Unida Systems has 44 million shares outstanding trading for $8
per share. In? addition, Unida has $81 million in outstanding debt.
Suppose? Unida's equity cost of capital is 18%?, its debt cost of
capital is 7%?, and the corporate tax rate is 39%. a. What is?
Unida's unlevered cost of? capital? b. What is? Unida's after-tax
debt cost of? capital? c. What is? Unida's weighted average cost
of? capital?

Google Currently has 5 million common shares outstanding, and a
1 million preferred shares outstanding, and 100,000 bonds
outstanding. Use your answers in #3, #4, and #5 to calculate Google
Weighted Average Cost of Capital (WACC) if the corporate tax rate
is 35%.
#3: Average cost of equity is 13.76%
#4: Cost of preferred stocks is 6.0%
#5: Annual pre-tax debt is 6.85%

Google currently has a 5 million common shares outstanding, and
a 1 million preferred shares outstanding, and 100,000 bonds
outstanding. #4 = 6%, and #5 = 6.85% to calculate Google Weighted
Average Cost of Capital (WACC) if the corporate tax rate is 35%.
(Using excel and making formulas viewable)
The average cost of equity of Google is
19.04%.
The cost of Google’s preferred stocks if it is currently
priced at $100 is 6%.
The pre-tax cost of debt of Google...

18.2
Acort Industries has 11 million shares outstanding and a current
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outstanding. This debt is risk free, is four years away from
maturity, has an annual coupon rate of 7% , and has a $116 million
face value. The first of the remaining coupon payments will be due
in exactly one year. The riskless interest rates for all maturities
are constant at 4.2%. Acort has EBIT of $104 million,...

Company JKL Limited has 10 million stocks outstanding. The
shares are trading at 60$ per share. It also has 400 bonds
outstanding – each valued at 500.000$. The marginal tax-rate is at
30%. For the expected return of the shareholders is about 14% and
the interest rate for the bonds is at 8%. What is JKL’s after-tax
WACC?

Wonderful Ltd currently has 1.2 million ordinary shares
outstanding and the share has a beta of 2.2. It also has $10
million face value of bonds that have 5 years remaining to maturity
and 8% coupon rate with semi-annual payments, and are priced to
yield 13.65%. If Wonderful issues up to $2.5 million of new bonds,
the bonds will be priced at par and have a yield of 13.65%; if it
issues bonds beyond $2.5 million, the expected yield on...

Suppose a firm has 49.00 million shares of common stock
outstanding at a price of $13.80 per share. The firm also has
410000.00 bonds outstanding with a current price of $1,056.00. The
outstanding bonds have yield to maturity 6.31%. The firm's common
stock beta is 2.33 and the corporate tax rate is 38.00%. The
expected market return is 9.11% and the T-bill rate is 1.74%.
Compute the following:
-Weight of
Equity of the firm?
-Weight of
Debt of...

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