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What is the new cost of equity

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Reference no: EM133172609

Question - A company is financed 100% with equity and has a WACC of 10% and EBIT of $5,000. Assume no Taxes.

1) What is the cost of equity? What is the value of business?

2) If the company was to borrow $30,000 to buy back equity at 5% what is the new cost of equity? What is the new value of the firm? (Show work)

3) What is the WACC after the debt issuance? Assuming no taxes.

Reference no: EM133172609

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