Question
Cede & Co. expects its EBIT to be $73,374 every year forever. The firm can borrow at 11%. Cede currently has no debt, and its
Cede & Co. expects its EBIT to be $73,374 every year forever. The firm can borrow at 11%. Cede currently has no debt, and its cost of equity is 26%. The tax rate is 31%.
What is the firms cost of equity capital after borrowing $45,000 and using the proceeds to repurchase shares (i.e., after recapitalization)? (Answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations.)
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Elements Of Chemical Reaction Engineering
Authors: H. Fogler
6th Edition
9780135486221
