Cede & Co. expects its EBIT to be $55,000 every year forever. The firm can borrow at 7 percent. Cede currently has no debt, its cost of equity is 11 percent, and the tax rate is 35 percent. Assume the company borrows $153,000 and uses the proceeds to repurchase shares.
What is the cost of equity after recapitalization? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) Cost of equity= %?
What is the WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)