Multiple Choice
An unlevered firm has expected earnings of $37,584 and a market value of equity of $324,000.The firm is planning to issue $65,000 of debt at 6.6 percent interest and use the proceeds to repurchase shares at their current market value.Ignore taxes.What will be the cost of equity after the repurchase?
A) 12.85%
B) 13.58%
C) 13.40%
D) 12.04%
E) 12.48%
Correct Answer:
Verified
Correct Answer:
Verified
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