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Bruce & Co. expects its EBIT to be $149,000 every year forever. The firm can borrow at 11 percent. Bruce currently has no debt, and its cost of equity is 18 percent. The tax rate is 34 percent. Bruce will borrow $61,000 and use the proceeds to repurchase shares. What will the WACC be after recapitalization?
Kurt's market has 22,000 shares of stock outstanding with a par value of $1 per share and a market value of $17 per share. the balance sheet shows $22,000 in the common stock account, $236 in the capital in excess of par account, and $336,800 in the retained earnings account. The firm just announced a stock dividend of 10 percent. what will be the balance in the equity accounts after this dividends?
