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Bronco Corp (Bronco) currently has no debt in its capital structure. It is considering borrowing $45 million by issuing 10 year maturity bonds at an
Bronco Corp ("Bronco") currently has no debt in its capital structure. It is considering borrowing $45 million by issuing 10 year maturity bonds at an 8% coupon and using the proceeds to repurchase 25% of its outstanding stock. Please complete the following table for Bronco and answer the questions below while showing your work. Assume. as the Miller-Modigliani Theorem I does. that there are no cornorate taxes. 1. Please calculate the annual interest cost after the recapitalization of Bronco. 2. Please calculate the earnings per share of both unlevered and levered Bronco. 3. Please calculate the required return on common stock (kcs) before and after the recapitalization. 4. What is the WACC before and after the recapitalization
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