FINANCE-Meyer & Co. expects its EBIT to be $105,000 every year forever.

QUESTION

Meyer & Co. expects its EBIT to be $105,000 every year forever. The firm can borrow at 7 percent. Meyer currently has no debt, and its cost of equity is 13 percent and the tax rate is 35 percent. The company borrows $136,000 and uses the proceeds to repurchase shares. What is the cost of equity after recapitalization? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity% What is the WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC%

ANSWER:

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