Cede amp co expects its ebit to be 55000 every year forever, Ask an Expert

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Cede & Co. expects its EBIT to be $55,000 every year forever. The firm can borrow at 7 percent. Cede currently has no debt, its cost of equity is 11 percent, and the tax rate is 35 percent. Assume the company borrows $153,000 and uses the proceeds to repurchase shares.

What is the cost of equity after recapitalization? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) Cost of equity= %?

What is the WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92865446

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