Exercise : Assume that Schipper Company has the same data as before, but that Schipper Company now pays a marginal tax rate of 40 percent.
Required
1. What is the after-tax cost of the mortgage bonds?
2. What is the after-tax cost of the common stock?
3. What is the weighted average cost of capital for Schipper?
4. What is the dollar cost of capital for Schipper?
5. Calculate EVA for Schipper. Is Schipper creating wealth or not?