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Your all - equity firm has a cost of equity of 1 5 % and a cost of debt of 7 . 5 % .

Your all

-

equity firm has a cost of equity of

15 %

and a cost of debt of

7.5 % .

The current value of the firm is $

720, 000 .

You are considering to restructure by borrowing $

120, 000

in debt to repurchase shares. Tax rate is

35 % .

How much more is your firm worth after restructuring?

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