Calculate the new firm value

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BBC has perpetual EBIT of $4,650 and is an all equity financed firm. Its cost of equity is 12.9%. BBC plans to borrow perpetual debt of $7,931 at an interest rate of 4.7% to repurchase stock. If the present value of financial distress costs is 15.4% of debt borrowed and the tax rate is 37%, calculate the new firm value.

Reference no: EM133067765

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