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Bruce & Co. expects its EBIT to be $78,000 every year forever. The company can borrow at 10 percent. The company currently has no debt,

Bruce & Co. expects its EBIT to be $78,000 every year forever. The company can borrow at 10 percent. The company currently has no debt, its cost of equity is 13 percent, and the tax rate is 35 percent. The company borrows $104,000 and uses the proceeds to repurchase shares.

What is the cost of equity after recapitalization?

What is the company's WACC?

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