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What is the value of the levered firm

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You are considering two identical firms, one levered and the other unlevered. Both firms have expected EBIT of $29000. The value of the unlevered firm (VU) is $130000. The corporate tax rate is 30%. The cost of debt is 9%, and the ratio of debt to equity is 1 for the levered firm. Use Modigliani and Miller's (1963) propositions in a world without bankruptcy, what is the value of the levered firm?

Reference no: EM132554343

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