Oconnell amp co expects its ebit to be 58000 every year


O'Connell & Co. expects its EBIT to be $58,000 every year forever. The firm can borrow at 9 percent. O'Connell currently has no debt, and its cost of equity is 12 percent and the tax rate is 35 percent. The company borrows $180,000 and uses the proceeds to repurchase shares.

What is the cost of equity after recapitalization?

Request for Solution File

Ask an Expert for Answer!!
Finance Basics: Oconnell amp co expects its ebit to be 58000 every year
Reference No:- TGS0599062

Expected delivery within 24 Hours