Question
Cede & Co. expects its EBIT to be $61,000 every year forever. The firm can borrow at 9 percent. Cede currently has no debt, its
Cede & Co. expects its EBIT to be $61,000 every year forever. The firm can borrow at 9 percent. Cede currently has no debt, its cost of equity is 14 percent, and the tax rate is 35 percent. Assume the company borrows $165,000 and uses the proceeds to repurchase shares. |
What is the cost of equity after recapitalization? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) |
Cost of equity | % |
What is the WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) |
WACC | % |
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