b. (1) Value if unlevered (in thousands): the same as before, namely, $10,000 (10 million). (2) Value

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b. (1) Value if unlevered (in thousands): the same as before, namely,

$10,000 (10 million).

(2) Value with $4 million in debt:

I (1 - .40)(1 - .25)

Value = $10,000 + 1 - 1 - .30 I $4,000

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