Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Only answer last question please Brealey Corporation is currently all equity financed and has a value of $70 million. Investors currently require a return of
Only answer last question please
Brealey Corporation is currently all equity financed and has a value of $70 million. Investors currently require a return of 19.10 percent on common stock. Brealey pays no taxes. Brealey plans to issue $10 million of debt with a return of 7.4 percent and use the proceeds to repurchase common stock. What will be the value of the firm after the debt issue? Please state your answer in millions. Enter your response below. 70 Correct response: 70million This question has 4 parts, so you will be clicking verify 4 times. Given that the firm will still have a value of $70 million, what will be the value of the equity after the debt issue? Please state your answer in millions. Enter your response below. 60 Correct response: 60million Given that the value of the equity after the debt issue will be $60, what will be the expected return on the stock after the debt issue? Enter your answer as a percentage and round to 2 decimal places. Do not enter the percentage symbol. Enter your response below. 15.40 Correct response: 21.65+0.01 Given that the expected return on the stock after the debt issue is 21.05%, what will be the weighted Average Cost of Capital after the debt issue? Enter your answer as a percentage and round to 2 decimal places. Do not enter the percentage symbolStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started