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Total Manufacturing has an expected EBIT of $40,000 per year in perpetuity and a tax rate of 20%. The firm currently has no debt. Its

  1. Total Manufacturing has an expected EBIT of $40,000 per year in perpetuity and a tax rate of 20%. The firm currently has no debt. Its cost of debt is 8% and unlevered cost of capital is 14%. If the firm changes its capital structure by borrowing $120,000 to repurchase the same amount of equity, what would be the firm's value under the new capital structure?

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