What will be the cost of equity after the repurchase

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Question

An unlevered firm has expected earnings of $2, 401 and a market value of equity of $19, 600. The firm is planning to issue $4,000 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?

Reference no: EM132035347

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