What is the value of the levered firm

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Reference no: EM131959867

Jericho Snacks is an all-equity firm with estimated earnings before interest and taxes of $624,000 annually forever.

Currently, the firm has no debt but is considering borrowing $725,000 at 6.75 percent interest.

The tax rate is 35 percent and the current cost of equity is 15.2 percent. What is the value of the levered firm?

Reference no: EM131959867

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