An all-equity firm with 5,000 shares outstanding earns a perpetual annual EBIT of $10,000 and...
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An all-equity firm with 5,000 shares outstanding earns a perpetual annual EBIT of $10,000 and has a current cost of capital is 20%. The firm currently pays no taxes.Show all your result numerically. 15 Points a. The firm borrows $15,000 of perpetual debt at an interest rate of 10% and uses the proceeds to repurchase stock. What will be the firms new cost of capital and stock price after the repurchase transaction is completed? b. A while after the transaction,
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