What will be the cost of equity after the repurchase

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Reference no: EM131595491

An unlevered firm has expected earnings of $2,401 and a market value of equity of $19,600. The firm is planning to issue $5,000 of debt at 6 percent interest and use the proceeds to repurchase shares at their current market value. Ignore taxes. What will be the cost of equity after the repurchase?

A.15.21%

B.14.80%

C.14.39%

D.14.13%

E.13.86%

Reference no: EM131595491

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