Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. cede & co. expects its ebit to be $53,000 ever

Cede & Co. expects its EBIT to be $53,000 every year forever. The firm can...

70.2K

Verified Solution

Question

Finance

Cede & Co. expects its EBIT to be $53,000 every year forever. The firm can borrow at 9 percent. The firm currently has no debt, its cost of equity is 12 percent, and the tax rate is 35 percent. Assume the firm borrows $149,000 and uses the proceeds to repurchase shares. a. What is the cost of equity after recapitalization? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity ? % b. What is the WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC ?%

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

1. Is death reversible? 2. If this situation happened to you, how would you want your family...

Psychology
Q

TRUE OR FALSE? In the One Dimensional Movement Experiment, a \"smart cart\" moves on a rail (no...

Physics
Q

Design a roller chain drive with the following data. Specify the chain size, the sizes and...

Mechanical Engineering
Q

You are required to log data of humidity for a warehouse site survey of one year....

Electrical Engineering
Q

Question 11 pts   Which of the following are in accordance with generally accepted accounting principles? cash basis accounting accrual...

Accounting
Q

The graph of a function f x is given in the diagram 1 b 51...

Calculus
Q

Solve the given boundary value problem y x y 2y 2y 2x 2 y 0...

Calculus
Q

The 4th term of h 2 10 is 2 Use before exponents x would be...

Algebra
Q

Problem 8-41 (LO, 7) Heron Company purchases commercial reaity on November 13, 2004, for $650,000....

Accounting
Q

Congratulations! You've won a state lotto! The state lottery offers you the following (after-tax) payout...

Accounting
Q

X-cell Inc. began operations on August 1, 2023, and showed the following account balances at...

Accounting
Q

'Ebon Hawk Plc.' is going to make a new investment and in order to evaluate...

Finance