What will the wacc be after recapitalization

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Reference no: EM132063075

Bruce & Co. expects its EBIT to be $100,000 every year forever. The firm can borrow at 11%. They currently have no debt, a cost of equity of 18%, and a 20% tax rate. Bruce will borrow $61,000 and use the proceeds to repurchase shares. What will the WACC be after recapitalization? [Note: Round to 2 decimal places]

Please explain each step when solving.

Reference no: EM132063075

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