Question
Skimpole Sewing (SS) is a haberdashery manufacturer. At the end of the current year, analysts expect EBIT to be $3M and the same earnings are
Skimpole Sewing (SS) is a haberdashery manufacturer. At the end of the current year, analysts expect EBIT to be $3M and the same earnings are expected annually in perpetuity. Skimpole has long term debt of $5.5M and the (pre-tax) cost of debt is 4%. The unlevered cost of equity is 8% and the value of Skimpoles equity is $22.4M. The corporate tax rate is 30%. What is the companys WACC?
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A Study In Public Finance
Authors: A. C. Pigou
1st Edition
1443722766, 978-1443722766
