Trump Limited operates out of Miami Florida USA. Trump’s current earnings before interest and tax are $950,000. He projects that there will be no growth in earnings for the foreseeable future. Trump currently has no debt, but if he choose to borrow his cost of borrowing is seven percent. His unlevered cost is 11 percent, while his tax rate is 20 percent. Trump is seeking to add leverage to his company and consequently borrowed $350,000 from Biden Banking Group. What will be Trump’s WACC be after recapitalization?
Trump Limited operates out of Miami Florida USA. Trump’s current earnings before interest and tax are $950,000. He projects that there will be no growth in earnings for the foreseeable future. Trump currently has no debt, but if he choose to borrow his cost of borrowing is seven percent. His unlevered cost is 11 percent, while his tax rate is 20 percent. Trump is seeking to add leverage to his company and consequently borrowed $350,000 from Biden Banking Group. What will be Trump’s WACC be after recapitalization?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Trump Limited operates out of Miami Florida USA. Trump’s current earnings before interest and tax are $950,000. He projects that there will be no growth in earnings for the foreseeable future. Trump currently has no debt, but if he choose to borrow his cost of borrowing is seven percent. His unlevered cost is 11 percent, while his tax rate is 20 percent.
Trump is seeking to add leverage to his company and consequently borrowed $350,000 from Biden Banking Group.
What will be Trump’s WACC be after recapitalization?
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