Frederick & Co. expects its EBIT to be $80,000 every year forever.

The firm can borrow at 9 percent. Frederick currently has no debt, and its cost of equity is 19 percent. If the tax rate is 31 percent, the value of the firm is $ .

b. The value will be $ if Frederick borrows $42,000 and uses the proceeds to repurchase shares.

Frederick & Co. expects its EBIT to be $80,000 every year forever. The firm can borrow at 9 percent. Frederick currently has no debt, and its cost of equity is 19 percent. If the tax rate is 31 percent, the value of the firm is $ . The value will be $ if Frederick borrows $42,000 and uses the proceeds to repurchase shares. (Do not include the dollar signs ($). Round your answers to 2 decimal places. (e.g., 32.16))