Question
Co. expects its EBIT to be $57,000 every year forever. The firm can borrow at 9% and has no debt, cost of equity is 13%,
Co. expects its EBIT to be $57,000 every year forever. The firm can borrow at 9% and has no debt, cost of equity is 13%, tax is 35%. Assume the company borrows $157,000 and uses the proceeds to repurchase shares.
What is the cost of equity after recapitalization and WACC?Do not round calculations
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Essentials of Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
10th edition
77835425, 978-0077835422
