Plantronics Inc. expects its EBIT to be $49,000 every year forever. The firm can borrow...
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Plantronics Inc. expects its EBIT to be $49,000 every year forever. The firm can borrow at 8 percent. The firm currently has no debt, its cost of equity is 11 percent, and the tax rate is 21 percent. Assume the firm borrows $142,000 and uses the proceeds to repurchase shares. a. What is the cost of equity after recapitalization? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. % Cost of equity WACC b. %
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