What will be the cost of equity after the repurchase

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Reference no: EM132035317

Question

An unlevered firm has expected earnings of $33, 062.50 and a market value of equity of $287, 500.

The firm is planning to issue $50,000 of debt at 7 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?

Reference no: EM132035317

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