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Business, 16.05.2020 14:57 chjam265

Bruce & Co. expects its EBIT to be $100,000 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 31 percent. Bruce will borrow $61,000 and use the proceeds to repurchase shares, which is referred to as the recapitalization. What will the debt-to-equity ratio be after the recapitalization? Multiple Choice 0.00 percent 15.16 percent 17.88 percent 84.84 percent 100.00 percent

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Bruce & Co. expects its EBIT to be $100,000 every year forever. The firm can borrow at 11 percen...
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