What will be the levered value of the equity

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Reference no: EM132710141

The Dance Studio is currently an all-equity firm that has 22,000 shares of stock outstanding with a market price of $27 a share. The current cost of equity is 12 percent and the tax rate is 35 percent. The firm is considering adding $225,000 of debt with a coupon rate of 6.25 percent to its capital structure. The debt will sell at par.

Problem 1: What will be the levered value of the equity?

Reference no: EM132710141

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