Q. 17

Seabridge Company has expected earnings of $1,320,000 and a market value of equity of $12,400,000. The firm is planning to issue $4,700,000 of debt at 4 percent interest and use the proceeds to repurchase shares at their current market value. Ignore taxes. What will be the cost of equity after the repurchase? 14.82% 14.70% 14.58% 14.46% 14.34%