... capital is: rwacc = {B / (B+S)} rB + {S / (B+S)}rBS = {$7,500 / ($ 7,500 + $7,500) }(0 .10) + {$7,500 / ($ 7,500 + $7,500) }(0 .30) = (1 /2 )(0 .10) + (1 /2 )(0 .30) = 0.20 Frodo’s weighted ... 1 – {(1 – TC )(1 – TS) / (1 - TB)}] * B B = VU + [ 1 – {1 – 0.40 )(1 – 0.30) / (1 – 0.30)}] * $13,500,000 = VU + (0 .40 )($ 13,500,000) = VU + $5,400,000 As was stated in Chapter ... VU = {(EBIT )(1 - TC )(1 – TS)} / r0 = {($ 800,000 )(1 – 0.35 )(1 – 0)} / 0.10 = $5,200,000 Thus: VU = $5,200,000 B = $1,200,000 TC = 0.35 TS = 0 TB = 0.15 B C(B) =...