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As a consultant to First Responder inc.. you have obtained the following data (dollars in millions). The company plans to pay out all of its

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As a consultant to First Responder inc.. you have obtained the following data (dollars in millions). The company plans to pay out all of its earnings as dividends, hence g=0. Also, no net new investment in operating capital is needed because growth is zero. The CFO believes that a move from zero debt to 80.0% debt would cause the cost of equity to increase from 10.0\% to 14.0%, and the interest rate on the new debt would be 9.0%. What would the firm's total market value be if it makes this change? Hints: Find the FCF, which is equal to NOPAT =EBIT(1 - T) because no new operating capital is needed, and then divide by (WACC - g). Do not round your intermediate calculations. Oper. income (EBIT) $800 New cost of equity (re) 14.00% Interest rate (ra) 9.00% $5,854 $4,917 $6,205 $7,317 $5,561

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