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Te firm can borrow at 9 if the corporate tax rate is 35

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Old School Corporation expects an EBIT of $ 12,000 every year forever. Old School currently has no debt, and its cost of equity is 16 %. The firm can borrow at 9 %. If the corporate tax rate is 35 %, what is the value of the firm? What will the value be if Old School converts to 50 % debt?

Reference no: EM13569338

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