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What will the equity be worth

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Question - Analysts expect the BGT to generate EBIT of $10.5 million annually in perpetuity (starting in one year). BGT is all equity financed and its stockholders require a return of 5%. The value of BGT is $210 million. If BGT borrows $75 million (interest-only in perpetuity) with a cost of debt of 2.1%, then what will the equity be worth?

Reference no: EM132928045

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