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The Chief Financial Officer (CFO) of the ABC Company is interested to identify the cost of capital and value of the company. Currently, the ABC

The Chief Financial Officer (CFO) of the ABC Company is interested to identify the cost of capital and value of the company. Currently, the ABC is an all-equity company. Earnings before interest and taxes (EBIT) for the company is expected to be $86,015 forever, and the cost of capital is currently 15.39 percent. The corporate tax rate applicable to this company is 34.1 percent.

Market Value $ 368316.34

Suppose ABC floats a $32,908 debt issue and uses the proceeds to reduce share capital. The interest rate is 11.55 percent. Calculate the new value of the business.

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