Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Summer-Seas Limited operates out of Miami Florida USA. Its current earnings before interest and tax are $950,000. Earnings are projected to remain constant over the foreseeable future. Summer-Seas currently has no debt, but if it choose to borrow, its cost of borrowing would be seven percent.Summer-Seas has an unlevered cost of 11 percent, while its tax rate is 20percent.If Summer-Seas adds leverage to the company by borrowing $350,000, what willbe its WACC be after recapitalization? Kindly show all workings and formulae used.
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