Question
The Julia-n-Any Co. has expected EBIT of $600 in perpetuity, and unlevered cost of capital of 12%. Penn will raise debt with market value of
The Julia-n-Any Co. has expected EBIT of $600 in perpetuity, and unlevered cost of capital of 12%. Penn will raise debt with market value of $1,000 and interest of 8%. The firm will repurchase it equity using the proceeds from newly issued debt. The tax rate is 35%. Assume no financial distress in the economy. What is the firm's cost of Equity after the recapitalization?
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Information Quality Assurance And Internal Control For Management Decision Making
Authors: William R Kinney
1st Edition
0256221618, 9780256221619
