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Present value of ?nancial distress costs

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Wayne Enterprises has historically:I been an allaequity firm. Management expects EBITtD be $1.33 in perpetuity starting one year from now. The cost of equity for Wayne Enterprises is 8.5% and the tax rate is 30%. Suppose that Wayne Enterprises borrows $5.047B and uses the Funds to repurchase shares. What is the value of the ?rm if the present value of ?nancial distress costs is $0.5B?

Reference no: EM133055900

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