Using the proceeds to repurchase shares

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Reference no: EM132036758

Cede & Co. expects its EBIT to be $78994 every year forever. The firm can borrow at 12%. Cede currently has no debt, and its cost of equity is 21%. The tax rate is 34%. What is the firm’s WACC after borrowing $45,000 and using the proceeds to repurchase shares (i.e., after recapitalization)? Can you show the break down of the problem?

Reference no: EM132036758

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