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Eastcoast Transport Ltd can borrow at 7.5%. The firm currently has no debt, and the cost of equity is 16%. The current value of the

Eastcoast Transport Ltd can borrow at 7.5%. The firm currently has no debt, and the cost of equity is 16%. The current value of the firm is $540 000. What will the value be if the firm borrows $160 000 and uses the proceeds to repurchase shares? The corporate tax rate is 34%.

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