Question: Fields & Co. expects its EBIT to be $125,000 every year forever. The firm can borrow at 7 percent. The company currently has no debt,

Fields & Co. expects its EBIT to be $125,000 every year forever. The firm can borrow at 7 percent. The company currently has no debt, and its cost of equity is 12 percent. If the tax rate is 24 percent, what is the value of the firm? What will the value be if the company borrows $205,000 and uses the proceeds to repurchase shares? Input Area: EBIT Interest rate Cost of equity Tax rate Amount borrowed Output Area: $125,000 7% 12% 24% (Use cells A6 to B10 from the given information to complete this question.) Unlevered value Levered value $205,000

Fields \& Co. expects its EBIT to be $125,000 every year forever. The firm can borrow at 7 percent. The company currently has no debt, and its cost of equity is 12 percent. If the tax rate is 24 percent, what is the value of the firm? What will the value be if the company borrows $205,000 and uses the proceeds to repurchase shares? (Use cells A6 to B10 from the given information to complete this question.)

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