What is the value of the firm according to m&m proposition

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Question: UCW MBA Inc. has an expected EBIT of $67,000 in perpetuity and a tax rate of 35%. The firm has $139,000 in outstanding debt at an interest rate of 6.85%, and its unlevered cost of capital is 10.25%. What is the value of the firm according to M&M Proposition I with taxes? Should the company change its debt-equity ratio if the goal is to maximize the value of the firm? Explain. Show your steps.

Reference no: EM133326314

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