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Target Corporation (TGT) has $2.14 million in assets that are currently financed with 100% equity. TGTs EBIT is $385,000, and its tax rate is 25%.

Target Corporation (TGT) has $2.14 million in assets that are currently financed with 100% equity. TGTs EBIT is $385,000, and its tax rate is 25%. If TGT changes its capital structure to include 50% debt, its return on equity will increase. Assume the interest rate on debt is free.

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