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What is the cost of the levered equity

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A company has an EBIT of $3,140 in perpetuity. The unlevered cost of capital is 13.10%, and there are 16,870 common shares outstanding. The company is considering issuing $6,910 in new bonds at par to add financial leverage. The proceeds of the debt issue will be used to repurchase equity. The YTM of the new debt is 8.30% and the tax rate is 21%. What is the cost of the levered equity after the restructuring?

Reference no: EM132572711

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