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Fields & Co. expects its EBIT to be $125,000 every year Ical for Plans /ail forever. The firm can borrow at 7 percent. The company

Fields & Co. expects its EBIT to be $125,000 every year

Ical for Plans /ail

forever. The firm can borrow at 7 percent. The company currently has no debt, and

that the corpurit

its cost of equity is 12 percent. If the tax rate is 24 percent, what is the value of the

rent from befre.

firm? What will the value be if the company borrows $205,000 and uses the proceeds

to repurchase shares?

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