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  3. o?connell & co. expects its ebit to be $91,000

O?Connell & Co. expects its EBIT to be $91,000 every year forever. The firm can...

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Accounting

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O?Connell & Co. expects its EBIT to be $91,000 every year forever. The firm can borrow at 4 percent. O?Connell currently has no debt, and its cost of equity is 9 percent and the tax rate is 35 percent. The company borrows $136,000 and uses the proceeds to repurchase shares.

What is the cost of equity after recapitalization?

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