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What is the weighted average cost of capital

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-Juno Industrial Products expects its EBIT to be $1,500,000 every year forever. The firm can borrow at 6%. The company currently has no debt, and its cost of equity is 10%. Suppose that the tax rate is 21%.

-If the company borrows $800,000 and uses the proceeds to repurchase shares, what is the value of the equity of the firm after recapitalization?

-What is the weighted average cost of capital (WACC) after recapitalization?

Reference no: EM133060650

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