Lazare Corporation expects an EBIT of $15,600 every year forever. Lazare currently has no debt, and its cost of equity i

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answerhappygod
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Lazare Corporation expects an EBIT of $15,600 every year forever. Lazare currently has no debt, and its cost of equity i

Post by answerhappygod »

Lazare Corporation expects an EBIT of $15,600 every year
forever. Lazare currently has no debt, and its cost of equity is
10%. The firm can borrow at 7%. (Do not round intermediate
calculations. Round the final answers to 2 decimal places. Omit $
sign in your response.)
a. If the corporate tax rate is 35%, what is the value of the
firm?
b. What will the value be if the company converts to 40%
debt?
c. What will the value be if the company converts to 100%
debt?
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