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What is the wacc after the recapitalization

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Reference no: EM132970605

Problem 1: A firm expects its EBIT to be $167,000 every year, in perpetuity. The company is currently unlevered with a cost of equity of 17%. It faces a tax rate of 23%. The firm plans to borrow $175,000 and use the proceeds to repurchase shares. If the firm's cost of borrowing is 10%, what is its WACC after the recapitalization

Reference no: EM132970605

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