Question: Evergreen Ltd. expects it EBIT to be $80,000 every year forever. The firm can borrow at 8%. It has no debt and the cost of

Evergreen Ltd. expects it EBIT to be $80,000 every year forever. The firm can

borrow at 8%. It has no debt and the cost of equity is 10%. If the tax rate is 20%,

what is the value of the firm? What will the value be if it borrows $50,000 and

repurchase the outstanding shares and the cost of equity, WACC after

recapitalization? (4 Decimal Places)

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