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Bruce amp co expects its ebit to be 140000 every year

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Bruce & Co. expects its EBIT to be $140,000 every year forever. The firm can borrow at 9%. Bruce currently has no debt, and its cost of equity is 17%. If the tax rate is 35%, what is the value of the firm? What will the value be if Bruce borrows $135,000 and uses the proceeds to repurchase shares?

Reference no: EM13568296

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