What are xom wacc and total firm value

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XOM is considering a change in its capital structure. XOM will increase its debt level to a capital structure with 60% debt and repurchase shares with the extra money that it borrows. XOM will retire old debt to issue new debt, and the rate on the new debt will be 10%. XOM currently has $50M in debt carrying a rate of 8%, and its stock price is $40 per share with 2.5 million shares outstanding. XOM is a zero-growth firm and pays all its earnings as dividends. The firm's EBIT is $30 million, and its tax rate is 30%. The market return is 12% and risk-free rate is 5%. XOM has a beta of 1.6.

What are XOM's WACC and total firm value with 60% of debt?

Reference no: EM132704978

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