What is the cost of equity after recapitalization

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O’Connell & Co. expects its EBIT to be $105,000 every year forever. The firm can borrow at 7 percent. O’Connell currently has no debt, and its cost of equity is 13 percent and the tax rate is 35 percent. The company borrows $136,000 and uses the proceeds to repurchase shares. What is the cost of equity after recapitalization? What is the WACC?

Reference no: EM131014248

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