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An all-equity corporation has an expected EBIT of $600,000, which it expects to earn in perpetuity. The corporate tax rate is 30%. The company's unlevered

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An all-equity corporation has an expected EBIT of $600,000, which it expects to earn in perpetuity. The corporate tax rate is 30%. The company's unlevered cost of equity is 10% and cost of debt is 7%. The company is planning on issuing $1,900,000 of debt and using the proceeds to buy back its shares at the current market value. Assuming that there are no other market imperfections other than taxes, what will be the required rate of return on the company's equity after the restructuring is completed? A) 12.31% B) 11.99% C) 11.45% D) 13.64% E) 12.89%

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