Calculate the new firm value

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CDC has perpetual EBIT of $4,527 and is an all equity financed firm. Its cost of equity is 12.3%. CDC plans to borrow perpetual debt of $8,144 at an interest rate of 6.4% to repurchase stock. If the present value of financial distress costs is 14.9% of debt borrowed and the tax rate is 35%, calculate the new firm value.

Reference no: EM133073484

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