Question: The ABC company is unlevered and is valued at $1,280,000. There are currently 32,000 shares outstanding and effective marginal tax bracket is zero. ABC is

The ABC company is unlevered and is valued at $1,280,000. There are currently 32,000 shares outstanding and effective marginal tax bracket is zero. ABC is currently deciding whether including debt in its capital structure would increase its value. The current cost of equity is 12%. And cost of debt is 7% ABC wants to repurchase 2,800 shares. What is the cost of equity after recapitalization (new Rs)?

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