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Cyrus weighted average cost of capital

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Cyrus plc is an all equity firm with a share price of £20, an unlevered cost of capital of 12%, a tax rate of 34%. There are currently 32,000 shares outstanding. The company is planning to issue £300,000 of perpetual bonds and use the proceeds to repurchase equity. The required return on the bonds is 8%. What would be Cyrus weighted average cost of capital (WACC) after this change in the capital structure?

Reference no: EM132711475

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