An unlevered firm has a cost of equity of 13.5 percent

Reference no: EM13704032

In the M&M no-tax world, an unlevered firm has a cost of equity of 13.5 percent and expected EBIT of $285,000. The firm decided to issue $700,000 debt at a cost of 8 percent to finance a project, which has an ROI of 15 percent. It has 500,000 shares outstanding. Calculate the new share price of the firm after issuing the debt.

Reference no: EM13704032

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