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Richards Enterprises expects its EBIT to be $138,000 every year forever. The firm can borrow at 9 percent. Richard currently has no debt, and its

Richards Enterprises expects its EBIT to be $138,000 every year forever. The firm can borrow at 9 percent. Richard currently has no debt, and its cost of equity is 9 percent. If the tax rate is 25 percent, what is the value of the firm? What will the value be if the company borrows $95,000 and uses the proceeds to repurchase shares?

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