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A company just issued $ 3 5 1 0 0 0 of perpetual 8 % debt and used the proceeds to repurchase stock. The company

A company just issued $

351000

of perpetual

8 %

debt and used the proceeds to repurchase stock. The company expects to generate

123000

of EBIT in perpetuity. The company distributes all its earnings as dividends at the end of each year. The firm

s unlevered cost of capital is

15 %

and the tax rate is

35 % .

Use FTE to calculate the value of the company

s equity.

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