Question
In: Finance
Company A has a current EBIT as $350,000. The company predicts that there will be no...
Company A has a current EBIT as $350,000. The company predicts that there will be no growth in earnings for the foreseeable future. Company A does not have any current debt but if they are to borrow, the cost of borrowing is 7%. Their unlevered cost is 12% and their tax rate is 35%.
Company A is seeking to add leverage to their company and borrowed $350,000 from First National Bank.
What will be Company's WACC after recapitalization?
Please show all working and formulas used. Explain any necessary steps.
Solutions
Expert Solution
SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE
WACC =
11.27%
jeff jeffy answered 2 years agoRelated Solutions
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