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2) Corporation B expects an EBIT of $29,000,000 every year forever. The company currently has no debt and its cost of equity is 12%. The
2) Corporation B expects an EBIT of $29,000,000 every year forever. The company currently has no debt and its cost of equity is 12%. The tax rate is 45%. Suppose the company can borrow at 7%. What will be the value of the company be if it takes on debt equal to 62% of its unlevered value?
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