Market Value of Equity and WACC
January 26th, 2023
Market Value of Equity: $2,000,000.00
Cost of unlevered equity: 18.00%
Cost of debt: 10.00%
Planned issuance of debt: $400,000.00
A – After Rayburn repurchases the stock, what will the firm’s WACC be?
B – After the repurchase, what will the cost of equity be? Explain.
C – Use your answer to (b) to compute Rayburn’s WACC after the repurchase. Is this answer consistant with (a)?