The company borrows 108000 and uses the proceeds to, Financial Management

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The company borrows 108000 and uses the proceeds to

Meyer & Co. expects its EBIT to be $42,000 every year forever. The firm can borrow at 6 percent. Meyer currently has no debt, and its cost of equity is 10 percent and the tax rate is 35 percent. The company borrows $108,000 and uses the proceeds to repurchase shares. What is the cost of equity after recapitalization? What is the WACC?

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Financial Management: The company borrows 108000 and uses the proceeds to

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