Bruce & Co

question 24

Multiple Choice

Bruce & Co. expects its EBIT to be $165,000 every year forever. The company currently has no debt but can borrow at 8.6 percent while its cost of equity is 14.7 percent. The tax rate is 21 percent. The company is planning to borrow $55,000 and use the loan proceeds to repurchase shares. What will be the WACC after recapitalization?

• A) 14.57 percent
• B) 15.07 percent
• C) 14.51 percent
• D) 14.11 percent
• E) 14.58 percent

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Definitions:

Training Experience

The practical learning and skill acquisition gained through participating in specific educational programs or on-the-job activities.

Interviewer

A person who asks questions from another person, especially in a formal or structured setting, such as for a job interview or research purpose.

Field Supervisors

Professionals who oversee and provide guidance to individuals during practical training or fieldwork in their specific area of expertise.

Proactive

Taking initiative by acting in anticipation of future problems, needs, or changes rather than reacting after they occur.