Question: IAmFarmer, Co . can borrow at 6 . 8 percent. The company currently has no debt and the cost of equity is 1 0 .

IAmFarmer, Co. can borrow at 6.8percent. The company currently has no debt and the cost of equity is 10.7 percent. The current value of the firm is $657,434. The corporate tax rate is 22 percent. What will the value be if the company borrows $390,887 and uses the proceeds to repurchase shares?

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