Bruce amp co expects its ebit to be 100000 every year, Ask an Expert

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Bruce & Co. expects its EBIT to be $100,000 every year forever. The firm can borrow at 11 percent. Bruce currently has no debt, and its cost of equity is 18 percent. The tax rate is 31 percent. Bruce will borrow $61,000 and use the proceeds to repurchase shares. What will be the value of levered firm after recapitalization?

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Financial Management, Finance

Category:- Financial Management
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