What is the cost of equity after recapitalization

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Meyer & Co. expects its EBIT to be $42,000 every year forever. The firm can borrow at 6 percent. Meyer currently has no debt, and its cost of equity is 10 percent and the tax rate is 35 percent. The company borrows $108,000 and uses the proceeds to repurchase shares.

What is the cost of equity after recapitalization? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Cost of equity %

What is the WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

WACC %

Reference no: EM131603675

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