In: Finance
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.