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SO 124 Gourmet Foods To Go has the following financial information Financo Book Equity: $4,000,000 Tax Rate 26% EBIT: $500,000 Gourmet Foods decides to borrow
SO 124 Gourmet Foods To Go has the following financial information Financo Book Equity: $4,000,000 Tax Rate 26% EBIT: $500,000 Gourmet Foods decides to borrow $2,000,000 at a 7 interest rate and with the proceed buy back 2.000.000 worth of their stock. Calculate return on equity before and after the loan and buy-back is made unlevered firm has a value of 600 million. An otherwise identical but levered t he 120 million in debt. If the corporate tax rate is 30%, what is the value of the levered firm ning the MM Corporate-tax model
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