What is the cost of equity and wacc

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Reference no: EM131997920

The current market value of the all equity firm Steph’s Sweets Shops is $21.5 million.

a. If there are no taxes and the EBIT is $2,633,750, what is the cost of equity? What is the WACC?

b. If the tax rate is 40%, what is the EBIT if the unlevered cost of equity is 12.25%? What is the WACC?

(Assume there is no cost of financial distress and general M&M assumptions apply)

Reference no: EM131997920

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