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Hanover Tech is currently an all-equity firm that has 130,000 shares of stock outstanding with a market price of $36 a share. The current cost
Hanover Tech is currently an all-equity firm that has 130,000 shares of stock outstanding with a market price of $36 a share. The current cost of equity is 14% and the tax rate is 35%. The firm is considering adding $1.5 million of debt with a coupon rate of 7% to its capital structure. The proceeds will be used to buy back shares from the market. The debt will be sold at par value. What is the levered value of the equity?
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