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Nistler Corp expects its EBIT to be $120,000 every year forever. The firm can borrow at 5 percent. The company currently has no debt, and

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Nistler Corp expects its EBIT to be $120,000 every year forever. The firm can borrow at 5 percent. The company currently has no debt, and its cost of equity is 10 percent and the tax rate is 30 percent. The company borrows $176,000 and uses the proceeds to repurchase shares. a. What is the cost of equity after recapitalization? (7 points) b. What is the WACC? (3 points)

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