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Q4 (20 points) ZeroLeverage Co is a manufacturing firm. The company generates an EBIT of $250,000 per year and forever. ZeroLeverage Co will always distribute

Q4 (20 points) ZeroLeverage Co is a manufacturing firm. The company generates an EBIT of $250,000 per year and forever. ZeroLeverage Co will always distribute its earnings as dividends to its shareholders. ZeroLeverage Cos current capital structure includes 100% equity. There are 100,000 shares of common stocks outstanding. ZeroLeverage Co project has a market beta 1.5. The risk-free asset is yielding 5% per year, and the market risk premium is 5% per year.

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