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MM Proposition I with Taxes: A company is presently unlevered. It will generate $100 million in EBIT in perpetuity. The corporate tax rate is 35%, and all earnings after tax are paid out as dividends. The rm is considering a capital restructuring to allow $55 million of debt. Its cost of debt capital is 8%. Unlevered rms in the same industry have a cost of equity capital of 17%. What will be the new value of the company after the capital restructuring?

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Category:- Financial Management
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