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A company is financed 100% with equity and has a WACC of 10% and EBIT of $5,000. Assume no Taxes 1) What is the cost
A company is financed 100% with equity and has a WACC of 10% and EBIT of $5,000. Assume no Taxes 1) What is the cost of equity? What is the value of business? 2) If the company was to borrow $30,000 to buy back equity at 5% what is the new cost of equity? What is the new value of the firm? (Show work) 3) What is the WACC after the debt issuance? assuming no taxes.
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