Jellybean Co$.$ expects EBIT of $$200,000$ every year forever. Jellybean Co$.$ currently has no debt and its cost of equity is $20\%.$ The firm can borrow at $3\%.$ The corporate tax rate is $25\%.$

What is the value of the firm? Enter your answer rounded to two decimal places.

Correct response: $750,000\backslash$pm $0\mathrm{.}01$

Click "Verify" to proceed to the next part of the question. This question has $4$ parts, so you will be clicking verify $4$ times.

Given that the firm has a value of $$750,000$ when it is all equity, what will be the value of the firm if Jellybean Co$.$ borrows $$290,000$ of permanent debt and uses the proceeds to buy back stock? Enter your answer rounded to two decimal places.

Correct response: $822,500\backslash$pm $0\mathrm{.}01$

Click "Verify" to proceed to the next part of the question.

Given that the firm has a value of $$750,000$ when it is all equity, how can Jellybean Co$.$ maximize the value of the firm? What will be the maximum value if there are no costs to financial distress? Enter your answer rounded to two decimal places.

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SectionAttempt $1$ of $1$