Question
Magma and Sons Inc. expects its EBIT to be $250,000 every year forever. The firm can borrow at 12 percent. Magma and Sons Inc. currently
Magma and Sons Inc. expects its EBIT to be $250,000 every year forever. The firm can borrow at 12 percent. Magma and Sons Inc. currently has no debt, and its cost of equity is 15 percent. The tax rate is 30 percent. Magma and Sons Inc. will borrow $90,000 and use the proceeds to repurchase shares. What will the WACC be after recapitalization?
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Health Care Finance Basic Tools For Nonfinancial Managers
Authors: Judith J. Baker, R.W. Baker
4th Edition
1284029867, 978-1284029864
