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Find the market value of equity and mm prop

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A firm expects its EBIT to be $169,000 every year, in perpetuity. The company is currently unlevered with a cost of equity of 18%. It faces a tax rate of 23%. The firm plans to borrow $170,000 and use the proceeds to repurchase shares. If the firm's cost of borrowing is 11%, what is its WACC after the recapitalization? Hint: use MM Prop I to find the market value of equity and MM Prop II to find the cost of equity

Reference no: EM133001292

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