Question: Key Lime Pie Co . expects EBIT of $ 1 0 0 , 0 0 0 every year forever. Key Lime Pie Co . currently

Key Lime Pie Co. expects EBIT of $100,000 every year forever. Key Lime Pie Co. currently has no debt and its cost of equity is 10%. The firm can borrow at 6%. The corporate tax rate is 26%.
What is the value of the firm? Enter your answer rounded to two decimal places.
Correct response: 740,000+-0.01
Click "Verify" to proceed to the next part of the question. This question has 4 parts, so you will be clicking verify 4 times.
Given that the firm has a value of $740,000 when it is all equity, what will be the value of the firm if Key Lime Pie Corrows $260,000 of permanent debt and uses the proceeds to buy back stock? Enter your answer rounded to two decimal places.
Key Lime Pie Co. expects EBIT of $100,000 every year forever.

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