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Silver Corp. expects an EBIT of $550,000 every year forever. The firm currently has no debt, and its cost of equity is 20%. The firm

Silver Corp. expects an EBIT of $550,000 every year forever. The firm currently has no debt, and its cost of equity is 20%. The firm is thinking of borrowing $650,000 at 12% and buying back shares. The corporate tax rate is 40%. 23. What would be the value of the levered firm?  What would be the firm's cost of equity and WACC, respectively, after the recapitalization? 



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