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2. Suppose a levered firm has a current value of $10,100,000. Suppose that the firm currently has a tax rate of 35%. Suppose the firm

2. Suppose a levered firm has a current value of $10,100,000. Suppose that the firm currently has a tax rate of 35%. Suppose the firm would have a value of $9,400,000 without debt. Assume debt is perpetual. a) What is the equity worth at this firm? b) If the firm triples its value of debt, what will the firm be worth? c) If the firm doubles its debt-to-value ratio, what will the firm be worth?

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