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6. Compton Corporation currently has no debt in its capital structure. As an unlevered firm, its cost of equity is 11 percent. It is considering

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6. Compton Corporation currently has no debt in its capital structure. As an unlevered firm, its cost of equity is 11 percent. It is considering substituting $40,000 in debt at 3 percent interest. The EBIT for the firm is $28,000 under either scenario, and the tax rate is 35 percent. According to M&M with taxes, what is the value of the unlevered firm? a. $126,000 b. $165,455 c. $179,455 d. $254,545

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