Example2 New Schools, Inc. expects an EBIT of $7,000 every year forever. The firm currently...
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Example2 New Schools, Inc. expects an EBIT of $7,000 every year forever. The firm currently has no debt, and its cost of equity is 15 percent. The firm can borrow at 8 percent and the corporate tax rate is 34 percent. What will the value of the firm be if it converts to 50 percent debt
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