Meyer & Co. expects its EBIT to be $95,000 every year forever. The firm can borrow at 8 percent. The company currently has no debt, and its cost of equity is 13 percent and the tax rate is 23 percent. The company borrows $153,000 and uses the proceeds to repurchase shares.

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

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

Answer rating: 100% (QA)

A Cost of equity after recapitalization can be cal... View the full answer