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Atlantic Inc. has EBIT of $60m in perpetuity. The cost of capital of unlevered firm is 10%. Its corporate tax rate is 30%. (i) If

Atlantic Inc. has EBIT of $60m in perpetuity. The cost of capital of unlevered firm is 10%. Its corporate tax rate is 30%.

(i) If Atlantic is financed with 100% equity, what is Atlantics firm value?

60000000/0.1=600000000

(ii) If Atlantic is financed with $100m debt, and the rest with equity, what is Atlantics firm value?

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