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Business, 05.05.2020 06:22 ThatTrashPanda

O’Connell & Co. expects its EBIT to be $74,000 every year forever. The firm can borrow at 7%, and has a tax rate of 35%. O’Connell currently has no debt, and its cost of equity is 13%. a- What is the value of the firm? b- What will the value be if the company borrows $125,000 and uses the proceeds to repurchase shares?

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O’Connell & Co. expects its EBIT to be $74,000 every year forever. The firm can borrow at 7%, an...
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