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Firm Z expects an EBIT of $19,750 every year forever. It currently has no debt and its cost of equity is 15%. The firm can

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Firm Z expects an EBIT of $19,750 every year forever. It currently has no debt and its cost of equity is 15%. The firm can borrow at a rate of 10%. The firm is considering changing its debt/equity ratio to 1. If the tax rate is 0%, what will be the new value of the firm after the capital structure change? (Assume no bankruptcy costs). A. $131,666.67 B. $98,750.00 C. $158,000.00 D. $197,500.00

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