Question
O?Connell & Co. expects its EBIT to be $91,000 every year forever. The firm can borrow at 4 percent. O?Connell currently has no debt, and
| O?Connell & Co. expects its EBIT to be $91,000 every year forever. The firm can borrow at 4 percent. O?Connell currently has no debt, and its cost of equity is 9 percent and the tax rate is 35 percent. The company borrows $136,000 and uses the proceeds to repurchase shares. |
| What is the cost of equity after recapitalization? |
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Behavioural Approaches To Corporate Governance
Authors: Cameron Elliott Gordon
1st Edition
1138611395, 978-1138611399
