Uses proceeds to repurchase shares

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Reference no: EM131555109

Wolfgang can borrow at 12.25 percent. The company currently has no debt, and the cost of equity is 15.5 percent. The current value of the firm is $679,000. The corporate tax rate is 40 percent.

What will the value be if the company borrows $228,000 and uses the proceeds to repurchase shares??

Reference no: EM131555109

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