Question
Meyer & Co. expects its EBIT to be $151,000 every year forever. The firm can borrow at 6 percent. The company currently has no debt,
| Meyer & Co. expects its EBIT to be $151,000 every year forever. The firm can borrow at 6 percent. The company currently has no debt, and its cost of equity is 13 percent and the tax rate is 22 percent. The company borrows $195,000 and uses the proceeds to repurchase shares.
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International Financial Management
Authors: Geert Bekaert, Robert J. Hodrick
2nd edition
013299755X, 132162768, 9780132997553, 978-0132162760
