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Telefonica expects an EBIT of 20.000 every year forever. The company currently has no debt, and its cost of equity is 16 percent. 1. What

Telefonica expects an EBIT of 20.000 every year forever. The company currently has no debt, and its cost of equity is 16 percent. 1. What is the current value of the company? 2. Assume Telefonica can borrow at 10 percent, and the management decides to take debt at 75% of its value (before taking debt). The tax rate is 25%. Has the value of the company changed? And if so, how much? How do you explain this situation

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