Uses the proceeds to repurchase shares

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Reference no: EM131916249

Wolfgang can borrow at 11.25 percent. The company currently has no debt, and the cost of equity is 13.5 percent. The current value of the firm is $667,000. The corporate tax rate is 32 percent.

What will the value be if the company borrows $224,000 and uses the proceeds to repurchase shares? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Value of the firm $

Reference no: EM131916249

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