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A company currently has zero debt. It is a zero growth company with $70,000 EBIT and is considering recapitalizing with 20% debt. The money raised would cost 7% and be used to repurchase stock. It is estimated that the increase in risk resulting from the additional leverage would cause the required rate of return on equity to rise a full percent from its current 10%. The current price per share is $46.00 and it is in the 40% corporate tax bracket. What will the value of operations be after the recapitalization?

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