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The firm want to add some leverage to their firm as they are running their business at a 0% debt level. The firm has a
The firm want to add some leverage to their firm as they are running their business at a 0% debt level. The firm has a projected EBIT of $198,000 and can issue debt at 5.8% per annum. They wish to increase their D/E ratio to 1.08 at the end of the year. Deckland estimates their cost of equity to be 14.1% and pays 34% in taxes per year.
what is the firm value after it adds this leverage to the firm?
Multiple Choice
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$926,809
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$1,174,305
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$1,090,426
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$834,128
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$1,008,617
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