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Lazare Corporation expects an EBIT of $21,000 every year forever. Lazare currently has no debt, and its cost of equity is 12%. The firm can

Lazare Corporation expects an EBIT of $21,000 every year forever. Lazare currently has no debt, and its cost of equity is 12%. The firm can borrow at 10%.

a. If the corporate tax rate is 35%, what is the value of the firm?

Value of the firm $

b. What will the value be if the company converts to 50% debt?

Value of the firm $

c. What will the value be if the company converts to 100% debt?

Value of the firm $

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