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Suppose a levered firm has a current value of $15,000,000. Suppose that the firm currently has a tax rate of 35%. Suppose the firm would

Suppose a levered firm has a current value of $15,000,000. Suppose that the firm currently has a tax rate of 35%. Suppose the firm would have a value of $12,800,000 without debt.

a) What is the equity worth at this firm?

b) If the firm wants to raise $10,000,000 in debt, what will the firm be worth?

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