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Omega Corp. currently has 100,000 shares of stock outstanding but is planning on issuing debt in order to buy back stock. Their EBIT is a constant...
Omega Corp. currently has 100,000 shares of stock outstanding but is planning on issuing debt in order to buy back stock. Their EBIT is a constant $1,000,000 regardless of how much debt they issue and they pay all net income out as dividends. Their tax rate is 40%. They have estimated the following costs of debt and costs of equity for various levels of debt.