Frederick Co expects its EBIT to be $92,000 every year forever The firm can borrow at 9 Frederick currently has no debt, and its cost of equity is 15 If the tax rate is 35 , a What is the value of the firm b What will the value be if the company borrows $60,000 and uses the proceeds to repurchase shares

Question: Frederick & Co. expects its EBIT to be $92,000 every year forever. The firm can borrow at 9%. Frederick currently has no debt, and its

Frederick & Co. expects its EBIT to be $92,000 every year forever. The firm can borrow at 9%. Frederick currently has no debt, and its is 15%. If the tax rate is 35%,
a. What is the value of the firm?
b. What will the value be if the company borrows $60,000 and uses the proceeds to repurchase shares?

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