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The Ballarat Brewing Company (BBC) is currently an all equity firm with 1,000,000 shares outstanding. The company's weighted average cost of capital (WACC) is 10%
The Ballarat Brewing Company (BBC) is currently an all equity firm with 1,000,000 shares outstanding. The company's weighted average cost of capital (WACC) is 10% p.a. and it has an expected EBIT of $500,000 per year. BBC is considering raising $1 million in debt at a cost of 6% p.a. and using the proceeds to repurchase shares. Assuming no taxes, what is The Ballarat Brewing Company's required return on equity before the restructuring? 9.20% You Answered O None of the options 06.00% Correct Answer 10.00% 8.00%
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