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Farmington Company can borrow at 7 . 2 percent. The company currently has no debt and the cost of equity is 1 1 . 6

Farmington Company can borrow at 7.2 percent. The company currently has no debt and the cost of equity is 11.6 percent. The current value of the firm is $675,000. The corporate tax rate is 21 percent. What will the value be if the company borrows $390,000 and uses the proceeds to repurchase shares?

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