1-O'Connell & Co. expects its EBIT to be $74,000 every year forever.The firm can borrow at 7%,...

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1-O'Connell & Co. expects its EBIT to be $74,000 every year forever.The firm can borrow at 7%, and has a tax rate of 35%.O'Connell currently has no debt, and its cost of equity is 13%.

a-What is the value of the firm?

b-What will the value be if the company borrows $125,000 and uses the proceeds to repurchase shares?

Posted Date: Jun 06, 2024 03:22 AM

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1-O'Connell & Co. expects its EBIT to be $74,000 every year forever.The firm can borrow at 7%,...

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