Question
Cede & Co. expects its EBIT to be $73,628 every year forever. The firm can borrow at 13%. Cede currently has no debt, and its
Cede & Co. expects its EBIT to be $73,628 every year forever. The firm can borrow at 13%. Cede currently has no debt, and its cost of equity is 23%. The tax rate is 35%.
What is the firms WACC 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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Personal Finance
Authors: E. Thomas Garman, Raymond Forgue
9th Edition
0618938737, 978-0618938735
