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Rogot Instruments makes fine violins and cellos. It has ?$1.7 million in debt? outstanding, equity valued...

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Finance

Rogot Instruments makes fine violins and cellos. It has ?$1.7million in debt? outstanding, equity valued at ?$2.1 million andpays corporate income tax at rate 36 % . Its cost of equity is 14 %and its cost of debt is 6 % .

a. What is? Rogot's pretax? WACC?

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

Answer & Explanation Solved by verified expert
3.7 Ratings (523 Votes)
The Weighted Average cost of capital WACC is the rate that the company is expected to pay its holders both debt and equity for the use of the funds Thus this is the rate which is minimum to please the    See Answer
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