Cede & Co. expects its EBIT to be $163,000 every year forever. The company can borrow at 8 percent. The company currently has no debt and its cost of equity is 15 percent and the tax rate is 23 percent. The company borrows $185,000 and uses the proceeds to repurchase shares. |
a. |
What is the cost of equity after recapitalization? |
b. | What is the WACC? |
(For all requirements, do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
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