Question: Management is considering issuing debt and using the proceeds to buy back equity. Based on the below noted information, what would be the return on

Management is considering issuing debt and using the proceeds to buy back equity. Based on the below noted information, what would be the return on equity after having issues the debt and bought back equity?

EBIT = 503259

New debt = 2,000,000

Cost of Debt = 12.0%

Equity (before buy back) = 4,000,000

Tax rate = 20%

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