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

can borrow at $7$ percent. The company currently has no debt, and its cost

lof equity is $12$ percent. If the tax rate is $24$ percent, what is the value of

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

uses the proceeds to repurchase shares?

I