Question: Please answer all questions. Due date is rather soon, all help is appreciated! 1. Worcester Corporation expects an EBIT of $24,590 every year forever. The

Please answer all questions. Due date is rather soon, all help is appreciated!

1. Worcester Corporation expects an EBIT of $24,590 every year forever. The company currently has no debt, and its cost of equity is 12.5 percent. The company can borrow at 4.5 percent and the corporate tax rate is 21.

a. What is the current value of the company? (5 Points)

b. What will the value of the firm be if the company takes on debt equal to 40 percent of its unlevered value? (5 Points)

c. What will the value of the firm be if the company takes on debt equal to 100 percent of its unlevered value? (5 Points)

d. What will the value of the firm be if the company takes on debt equal to 40 percent of its levered value? (5 Points)

e. What will the value of the firm be if the company takes on debt equal to 100 percent of its levered value? (5 Points)

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