MM and Taxes Bruce & Co. expects its EBIT to be $185,000 every year forever. The firm
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MM and Taxes Bruce & Co. expects its EBIT to be $185,000 every year forever.
The firm can borrow at 9 percent. Bruce currently has no debt, and its cost of equity is 16 percent. If the tax rate is 35 percent, what is the value of the firm? What will the value be if Bruce borrows $135,000 and uses the proceeds to repurchase shares?
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Related Book For 
Corporate Finance With Connect Access Card
ISBN: 978-1259672484
10th Edition
Authors: Stephen Ross ,Randolph Westerfield ,Jeffrey Jaffe
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