Question: P.S. 8.4% and 9.96% are INCORRECT O'Connell & Co. expects its EBIT to be $81,000 every year forever. The firm can borrow at 8 percent.

P.S. 8.4% and 9.96% are INCORRECT O'Connell & Co. expects its

P.S.

8.4% and 9.96% are INCORRECT

O'Connell & Co. expects its EBIT to be $81,000 every year forever. The firm can borrow at 8 percent. O'Connell currently has no debt, and its cost of equity is 12 percent and the tax rate is 35 percent. The company borrows $132,000 and uses the proceeds to repurchase shares. What is the cost of equity after recapitalization? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Cost of equity What is the WACC? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) P.S. 8.4% and 9.96% are INCORREC

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