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Bruce & Co. has expected EBIT of $90,000 per year. The firm can borrow at 10 percent. Bruce currently has no debt, and its cost

Bruce & Co. has expected EBIT of $90,000 per year. The firm can borrow at 10 percent. Bruce currently has no debt, and its cost of equity is 23 percent. The tax rate is 31 percent and interest is tax deductible. Except for taxes, assume that markets are perfect (no bankruptcy, etc.)

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