I tax rate is 35 percent value of the firm is the value

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Frederick & Co. expects its EBIT to be $91,000 every year forever. The firm can borrow at 4 percent. Frederick currently has no debt, and its cost of equity is 11 percent. If the tax rate is 35 percent, the value of the firm is $. The value will be $if Frederick borrows $136,000 and uses the proceeds to repurchase shares.

Reference no: EM13478554

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