JB [4] JB Manufacturing is currently an all-equity firm. The equity of firm is worth $2 million.

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JB [4]

JB Manufacturing is currently an all-equity firm. The equity of firm is worth $2 million. The cost of that equity is 18%. JB pays no taxes. JB plans to issue

$400,000 in debt and use the proceeds to repurchase equity. The cost of debt is 10%.

1. After the repurchase the stock, what will the overall cost of capital be?

2. After the repurchase, what will the cost of equity be?

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Lectures On Corporate Finance

ISBN: B00RGENH5I

1st Edition

Authors: Peter L Bossaerts ,Bernt Arne Odegaard

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Question Posted: Oct 25, 2024 06:00 AM

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JB [4] JB Manufacturing is currently an all-equity firm. The equity of firm is worth $2 million.

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Lectures On Corporate Finance

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