Problem 19-08, Rensselaer Felt Issues Equity, Retire Debt

Principles of Corporate Finance

Brealey, Myers, and Allen

13th Edition

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Difficulty – Medium

Given a balance sheet along with interest rates for debt, expected rate of return, shares outstanding, amount it is trading at, tax rate, and the new equity issued... determine the cost of equity and WACC after the capital restructuring where the company issues new equity to retire debt.

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