What is rogot pre-tax and effective after-tax

Assignment Help Financial Management

Reference no: EM131360836

Rogot Instruments makes fine violins and cellos. It has $1.2 million in debt outstanding, equity valued at $2.5 million, and pays corporate income tax at rate 35%. Its cost of equity is 12% and its cost of debt is 5%. (Round answers two decimal places)

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

b. What is Rogot's (effective after-tax) WACC?

Reference no: EM131360836

Questions Cloud

Share price today if the investment is financed with? debt : Kohwe Corporation plans to borrow $46.8 million to finance a new investment. The firm will pay interest only on this loan each? year, and it will maintain an outstanding balance of $46.8 million on the loan. Suppose that? Kohwe's corporate tax rate i..

What is the payback period if the initial investment : An investment provides the following (annual) returns (cash inflows): What is the payback period if the initial investment is $1800?

What is the implied monthly discount rate for the? rent : Annuity due. Reginald is about to lease an apartment for 18 months. The landlord wants him to make the lease payments at the start of the month. The monthly payments are ?$1,300 per month. The landlord says he will allow Reg to prepay the rent for th..

Venture capital is source of equity financing : Venture capital is a source of equity financing for successful multinational companies. Product differentiation is more likely when nations share the same level of economic development. Companies make products rather than buy them in order to reduce ..

What is rogot pre-tax and effective after-tax : Rogot Instruments makes fine violins and cellos. It has $1.2 million in debt outstanding, equity valued at $2.5 ?million, and pays corporate income tax at rate 35%. Its cost of equity is 12% and its cost of debt is 5%. (Round answers two decimal plac..

Future value-money in account faithfully at end of year : Future value. Jack and Jill are saving for a rainy day and decide to put ?$40 away in their local bank every year for the next 30 years. The local? Up-the-Hill Bank will pay them 7?% on their account. If Jack and Jill put the money in the account fai..

Present value of the interest tax shields from this debt : Your firm currently has $116 million in debt outstanding with a 10% interest rate. The terms of the loan require it to repay $29 million of the balance each year. Suppose the marginal corporate tax rate is 30%, and that the interest tax shields have ..

What price should the company set on the annuity contract : County Ranch Insurance Company wants to offer a guaranteed annuity in units of $200?, payable at the end of each year for 10 years. The company has a strong investment record and can consistently earn 12% on its investments after taxes. If the compan..

Summit builders has a market debt-equity ratio : Summit Builders has a market debt-equity ratio of 0.85, a corporate tax rate of 35 %, and pays 6% interest on its debt. By what amount does the interest tax shield from its debt lower Summit's WACC? (Round answer two decimal places)

User Account

All Pages