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A company has an EBIT of $5,210 in perpetuity. The unlevered cost of capital is 17.42%, and there are 30,190 common shares outstanding. The company
A company has an EBIT of $5,210 in perpetuity. The unlevered cost of capital is 17.42%, and there are 30,190 common shares outstanding. The company is considering issuing $11,410 in new bonds at par to add financial leverage. The proceeds of the debt issue will be used to repurchase equity. The YTM of the new debt is 12.44% and the tax rate is 39%. What is the value of the firm after the restructuring?
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