What is the cost of equity after recapitalization

Assignment Help Financial Management

Reference no: EM131178136

Cede & Co expects its EBIT to be $63,000 every year forever. The firm can borrow at 7%. Cede currently has no debt, its cost of equity is 13% and the tax rate is 35%. Assume the company borrows $169,000 and uses the proceeds to repurchase shares.

What is the cost of equity after recapitalization? (Do not round intermediate calcuations. Round answer to 2 decimal places)

What is the WACC? (Do not round intermediate calcuations. Round answer to 2 decimal places)

Reference no: EM131178136

Questions Cloud

Derive algebraically the quantities that should be produced : Derive algebraically the quantities that should be produced and sold, and the prices that should be charged, in each market. Calculate the price elasticities of demand in each market and discuss these in relation to the prices to be charged in each..

Net working capital requirement : Two years ago our company bought equipment for $1 million that has been depreciated straight line over a five-year life. Key points to consider: The equipment has a current market value of $300,000. Also, the Net Working Capital Requirement would dec..

Write an analysis on the major sides in the controversy : Identify a current ethical controversy that you want to learn more about in business, media, technology, medicine, or bioethics. Write a three-page analysis on the major sides in the controversy.

Would you regard the chef as an asset of the business : ACC00724 (Accounting for Managers). A local restaurant is noted for its fine food, as evidenced by the large number of customers. A customer was heard to remark that the secret of the restaurant's success was its fine chef. Would you regard the che..

What is the cost of equity after recapitalization : Cede & Co expects its EBIT to be $63,000 every year forever. The firm can borrow at 7%. Cede currently has no debt, its cost of equity is 13% and the tax rate is 35%. Assume the company borrows $169,000 and uses the proceeds to repurchase shares. Wha..

Write a mission statement for them : 1. What "value" does PetCube deliver and what is/are the company's core competency(s)? 2. Write a mission statement for them? 3. Conduct a brief SWOT analysis.

How would you rank importance of each of the four principle : How do you believe they would be ordered in the context of the Christian biblical narrative? Refer to the lecture and topic readings in your response.

How the items would be reported on the income statement : November 3, the automobile was sold to Ozzie Guillen, a stockholder. Indicate how these items would be reported on the income statement of Frank Thomas Co. (AICPA adapted)

What is unlevered cost of equity capital : Weston Industries has a debt–equity ratio of 1.8. Its WACC is 8.3 percent, and its cost of debt is 6.3 percent. The corporate tax rate is 35 percent. What is Weston's cost of equity capital? What would the cost of equity be if the debt-equity ratio w..

User Account

All Pages