Question
Cede & Co. expects its EBIT to be $82,494 every year forever. The firm can borrow at 10%. Cede currently has no debt, and its
Cede & Co. expects its EBIT to be $82,494 every year forever. The firm can borrow at 10%. Cede currently has no debt, and its cost of equity is 25%. The tax rate is 36%.
What is the firm's 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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Fundamentals of Investing
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
12th edition
978-0133075403, 133075354, 9780133423938, 133075400, 013342393X, 978-0133075359
