Meyer & Co. expects its EBIT to be $66,000 every year forever. The firm can borrow at 4 percent. Meyer currently has no debt, and its cost of equity is 9 percent and the tax rate is 35 percent. The company borrows $100,000 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.)
WACC %