Question
Meyer & Co. expects its EBIT to be $75,000 every year forever. The firm can borrow at 12 percent. Meyer currently has no debt, and
| Meyer & Co. expects its EBIT to be $75,000 every year forever. The firm can borrow at 12 percent. Meyer currently has no debt, and its cost of equity is 15 percent and the tax rate is 35 percent. The company borrows $152,000 and uses the proceeds to repurchase shares. |
| What is the cost of equity after recapitalization? |
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Foundations Of Finance
Authors: Arthur J. Keown, John H. Martin, J. William Petty
10th Edition
0135160618, 978-0135160619
