Bruce & Co. expects its EBIT to be $66,000 every year forever. The company can borrow at 4 percent. The company currently has no debt,
Bruce & Co. expects its EBIT to be $66,000 every year forever. The company can borrow at 4 percent. The company currently has no debt, its cost of equity is 9 percent, and the tax rate is 35 percent. The company borrows $100,000 and uses the proceeds to repurchase shares.
What is the cost of equity after recapitalization? (answer as a percent rounded to 2 decimal places) Cost of equity %
What is the company's WACC? ( answer as a percent rounded to 2 decimal places) WACC %
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Authors: Paul Asquith, Lawrence A. Weiss
2nd Edition
1119537835, 978-1119537830
