Question
Parsley Inc was an all-equity-financed firm generating $3M EBIT every year. It decided to issue $8.61M worth of bonds and use proceeds to buy back
Parsley Inc was an all-equity-financed firm generating $3M EBIT every year. It decided to issue $8.61M worth of bonds and use proceeds to buy back some shares. Before issuing debt the required return on its assets was 9%, the marginal tax rate is 21% and it placed bonds with 4.5% coupon rate. Assume that the risk-free rate is 1% and MRP is 6%. What is its WACC after issuing debt? give answer in %, with two decimal points precision
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Solution 1 Calculate the Cost of Equity re Since the firm is allequity financed well use the Require...
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
