Rendezvous Ltd$.$ expects its EBIT to be $$100,000$ every year

forever. The firm can borrow at $11$ percent. Bruce currently has

no debt, and its cost of equity is $18$ percent. The tax rate is

$31$ percent. Bruce will borrow $$61,000$ and use the proceeds to

repurchase shares. What will the WACC be after recapitalization

b$)$ Provide at least two circumstances, where interest tax$-$shield

will have no value for a company.

c$)$ Your firm has a debt$-$equity ratio of $0\mathrm{.}60.$ Your cost of equity

is $11$ percent and your after$-$tax cost of debt is $7$ percent. What

will your cost of equity be if the target capital structure

becomes a $50/50$ mix of debt and equity?