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Use the forward market to get foreign exchange

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1. A firm is currently financed with 60% equity and 40% debt. The firm generates perpetual earnings after taxes and interest payments of $4 million per year. The firm's cost equity is 15%, its cost of debt is 6%, and it has a tax rate of 40%. What is the value of the levered firm?

2. When would a company get foreign exchange in the spot market and when should the company use the forward market to get foreign exchange?

Reference no: EM132033146

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