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A company has an EBIT of $4,520 in perpetuity. The unlevered cost of capital is 15.98%,...

A company has an EBIT of $4,520 in perpetuity. The unlevered cost of capital is 15.98%, and there are 25,750 common shares outstanding. The company is considering issuing $9,910 in new bonds at par to add financial leverage. The proceeds of the debt issue will be used to repurchase equity. The YTM of the new debt is 11.06% and the tax rate is 33%. What is the weighted average cost of capital after the restructuring?

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 2 years ago
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