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What will the value be if bruce limited borrows

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Reference no: EM132770438

Bruce Limited expects its EBIT to be 100,000 every year for ever. The firm can borrow at 10 per cent. Bruce Limited currently has no dept, and its cost of equity is 20 per cent. If the tax rate is 21 per cent, what is the value of the firm? What will the value be if Bruce Limited borrows 80,000 and uses the proceeds to repurchase shares?

Reference no: EM132770438

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