Question
DIY Inc. is unlevered and valued at $602,777. It is currently deciding whether issuing $305,247 in new debt with an 0.061 interest rate. The current
DIY Inc. is unlevered and valued at $602,777. It is currently deciding whether issuing $305,247 in new debt with an 0.061 interest rate. The current of cost of equity is 0.106. DIY would repurchase stocks with the proceeds of the debt issue. There are currently 346,710 shares outstanding and their effective marginal tax bracket is 0.3. What will DIY's new WACC be?
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Modern Portfolio Theory and Investment Analysis
Authors: Edwin Elton, Martin Gruber, Stephen Brown, William Goetzmann
9th edition
9781118805800, 1118469941, 1118805801, 978-1118469941
