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Einstein Bagels is unlevered and is valued at $640,000. Einstein Bagels is currently deciding whether including debt in
Posted: Wed Jul 06, 2022 6:33 pm
by answerhappygod
- Einstein Bagels Is Unlevered And Is Valued At 640 000 Einstein Bagels Is Currently Deciding Whether Including Debt In 1 (17.22 KiB) Viewed 14 times
Einstein Bagels is unlevered and is valued at $640,000. Einstein Bagels is currently deciding whether including debt in its capital structure would increase its value. The current cost of equity is 12%. Under consideration is issuing $300,000 in new debt with an 8% interest rate. Einstein Bagels would repurchase $300,000 of stock with the proceeds of the debt issue. There are currently 32,000 shares outstanding and effective marginal tax bracket is zero. What will Einstein Bagels' new WACC be?