Question: Elzear & Co. expects its EBIT to be $58,000 every year forever. The firm can borrow at 9%. Elzear currently has no debt, and

Elzear & Co. expects its EBIT to be $58,000 every year forever.

Elzear & Co. expects its EBIT to be $58,000 every year forever. The firm can borrow at 9%. Elzear currently has no debt, and its cost of equity is 12%. (Round the final answers to 2 decimal places. Omit $ sign in your response.) If the tax rate is 35%, what is the value of the firm? Value of the firm What will the value be if the company borrows $180,000 and uses the proceeds to repurchase shares? Value of the firm.

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a Value of Firm EBIT 1 t Cost of Equity 58000 1 035 012 31416667 b Value of leve... View full answer

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