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a. Question 3 (6M) Casa Corporation, currently has no debt, expects an EBIT of $40,000 every year forever. Its cost of equity is 20 percent.

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a. Question 3 (6M) Casa Corporation, currently has no debt, expects an EBIT of $40,000 every year forever. Its cost of equity is 20 percent. The corporate tax rate is 35 percent. The company can borrow at 8 percent. What is the current value of the company? (2M) b. What will the value of the company be if the company takes on debt equal to 40 percent of its unlevered value? (2M) What will the value of the company be if the company takes on debt equal to 100 percent of its levered value? (2M) c

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