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Wolfgang can borrow at 7.1 percent. The company currently has no debt, and the cost of equity is 13.8 percent. The current value of the

Wolfgang can borrow at 7.1 percent. The company currently

has no debt, and the cost of equity is 13.8 percent. The current value of the firm

is $595,000. What will the value be if the company borrows $310,000 and uses

the proceeds to repurchase shares? The corporate tax rate is 35 percent.

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