What is the value of the levered firm

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Reference no: EM13721997

An unlevered firm has a cost of capital of 14% and earnings before interest and taxes of \$150,000. A levered firm with the same operations and assets has both a book value and a face value of debt of \$700,000 with a 7% annual coupon. The applicable tax rate is 35%. What is the value of the levered firm?

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