What is the levered value of the equity

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Decor Lamp is currently an all equity firm that has 100,000 shares of stock outstanding with a market price of $40 a share. The current cost of equity is 10 percent and the tax rate is 34 percent. The firm is considering adding $1 million of debt with a coupon rate of 6 percent to its capital structure. The debt will be sold at par value. What is the levered value of the equity?

Reference no: EM131855679

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