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A consultant has collected the following information regarding James Publishing: Total assets $3,000 million Tax rate 40% $800 million Operating income (EBIT) Debt ratio 0%

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A consultant has collected the following information regarding James Publishing: Total assets $3,000 million Tax rate 40% $800 million Operating income (EBIT) Debt ratio 0% Interest expense $0 million WACC 10% Net income $480 million M/B ratio 1.00x Share price $32.00 EPS DPS $3.20 The company has no growth opportunities (g 0), so the company pays out all of its earnings as dividends (EPS DPS). The consultant believes that if the company moves to a capital structure financed with 20% debt and 80% equity (based on market values) that the cost of equity will increase to 11% and that the pre-tax cost of debt will be 10%. If the company makes this change, what would be the total market value (in millions) of the firm

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