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3. Five J Ventures Co. has and expected perpetual EBITDA of $83,000 per year. Its borrowing cost is 8%; but has no debt . It

3. Five J Ventures Co. has and expected perpetual EBITDA of $83,000 per year. Its borrowing cost is8%; but has no debt. Its cost of unlevered equity is 13%.

a. If the tax rate is 35%, what is the value of the firm? (25 pts)

b. What will be value of the firm be if it borrows $125,000 and uses the proceeds to repurchase shares?

c. What is the value of the equity of the levered firm?

please give formulas and full work.

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