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Until It Sleeps Corporation expects an EBIT of $14,000 every year forever. Until It Sleeps currently has no debt, and its cost of equity is
Until It Sleeps Corporation expects an EBIT of $14,000 every year forever. Until It Sleeps currently has no debt, and its cost of equity is 16 percent. The firm can borrow at 9 percent. If the corporate tax rate is 35 percent, what is the value of the firm? What will the value be if the company converts to 50 percent debt? To 100 percent debt
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