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Farmington Company can borrow at 7 . 0 5 percent. The company currently has no debt and the cost of equity is 1 1 .

Farmington Company can borrow at 7.05 percent. The company currently has no debt and the cost of equity is 11.45 percent. The current value of the firm is $660,000. The corporate tax rate is 23 percent. What will the value be if the company borrows $375,000 and uses the proceeds to repurchase shares?

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