Elzear & Co. has a market value of $408,333 and its cost of equity is 12 percent. The firm can borrow at 7 percent but currently has no debt. If the tax rate is 35 percent, what is the value of the firm? What will the value be if the company borrows $125,000 and uses the proceeds to repurchase shares? what is the cost of equity after recapitalization? What is the WACC? What are the implications for the firm's capital structure decision?