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Brealey Corporation is currently all equity financed and has a value of $55 million. Investors currently require a return of 14.90 percent on common stock.
Brealey Corporation is currently all equity financed and has a value of $55 million. Investors currently require a return of 14.90 percent on common stock. Brealey pays no taxes. Brealey plans to issue $45 million of debt with a return of 6.1 percent and use the proceeds to repurchase common stock. What will be the value of the firm after the debt issue? Please state your answer in millions. Enter your response below. 55 Correct response: 55million Given that the firm will still have a value of $55 million, what will be the value of the equity after the debt issue? Please state your answer in millions. Enter your response below. 10 Correct response: 10million Given that the value of the equity after the debt issue will be $10, what will be the expected return on the stock after the debt issue? Enter your answer as a percentage and round to 2 decimal places. Do not enter the percentage symbol. Enter your response below. 54.50 Correct response: 54.50.01 Given that the expected return on the stock after the debt issue is 54.50%, what will be the Weighted Average Cost of Capital after the debt issue? Enter your answer as a percentage and round to 2 decimal places. Do not enter the percentage symbol. Enter your response below. Number
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