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Alwayshere Ltd. expects its EBIT to be $80,000 every year forever. The firm can borrow at 7%. It has no debt and the cost of

Alwayshere Ltd. expects its EBIT to be $80,000 every year forever. The firm can borrow

at 7%. It has no debt and the cost of equity is 10%. If the tax rate is 30%, what is the

value of the firm? What will the value be if it borrows $100,000 and repurchase the

outstanding shares and the cost of equity, WACC after recapitalization?

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