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Question 14 Your firm has just opened for business and that it was originally funded with capital equal to $30,000,000: $12,000, of return (4.8 percent
Question 14 Your firm has just opened for business and that it was originally funded with capital equal to $30,000,000: $12,000, of return (4.8 percent after-taxl; and $18,000,000 by stockholders who required a 15 percent rate of return. For all future years, the firm expects to depreciation is zero, and the firm's operations will produce sales of $40,000,000 and EBIT of 000 by creditors who required an 8 percent before-tax rate $5,300,000. As demonstrated in class, and assuming that the WACC remains constant and that the before-tax cost of debt remains constant, determine what the new cost of equity must be. 14.95% o 15.08% 15.21% 15.35% 15.50%
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