Cede & Co. expects its EBIT to be $92,600 every year forever. The firm can borrow at

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Cede & Co. expects its EBIT to be $92,600 every year forever. The firm can borrow at 7 percent. The firm currently has no debt, and its cost of equity is 14 percent. If the tax rate is 22 percent, what is the value of the firm? What will the value be if the firm borrows $165,000 and uses the proceeds to repurchase shares?

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Corporate Finance Core Principles And Applications

ISBN: 9781260571127

6th Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan

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