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Question 4 A firm with no leverage has an EBIT of $15 million a corporate tax rate of 20%, an equity value of $200 million

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Question 4 A firm with no leverage has an EBIT of $15 million a corporate tax rate of 20%, an equity value of $200 million and 70 million shares outstanding. The firm plans to borrow $50 milion can assume that the debt will stay risk-free. The funds will be used to buy back shares on the market. The new share price after the announcement of this transaction will be $3.00 $2.14 53.57 52.86 $3.07

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