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Scenario: Wonka Industries has EBIT of $10M; after-tax debt cost of 5%; equity cost of 9%; capital structure is $30M Debt and $30M Equity; and

Scenario: Wonka Industries has EBIT of $10M; after-tax debt cost of 5%; equity cost of 9%; capital structure is $30M Debt and $30M Equity; and its tax rate = 21%.

  1. Calculate the tax shield and tax benefit. Please, Share your math and results.
  2. Calculate the firm's value, including tax benefit.

Thank you!

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