Problem #2: ABC Company is an unlevered firm, meaning that it is financed with ABC expects to earn EBIT (Earni ofequity is 25% and tax rate is 35%. 100% equity and has 0% debt. Its cost ngs before interest and tax) of $80,000 annually, forever. D) What is the market valoc of ABC Company a an unlevered nim(v ii) ABC wants to change its capital structure from being an unlevered company to a levered uppose ABC borrows $50,000 at l 4% interest rate and uses the proceeds to 0 of equity by $50,000 of debt? Calculate the value of ABC repurchase and replace $50,00 Company as a levered firm and the value of value of equity. Remember that tax rate is 35% $. Value of equity- E-$ Value of levered firm = VL = [Hint: Vi = Vu + Tax shield and VL = D + E]