Bruce amp co expects its ebit to be 49000 every year, Ask an Expert

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Bruce & Co. expects its EBIT to be $49,000 every year forever. The company can borrow at 8 percent. The company currently has no debt, and its cost of equity is 11 percent.

If the tax rate is 35 percent, what is the value of the company?

What will the value be if the company borrows $142,000 and uses the proceeds to repurchase shares?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92087351

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