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QUESTION
Dupuis can borrow at 9 percent. Dupuis currently has no debt, and the cost of equity is 15 percent. The current value of the firm is $735,000.
- Dupuis can borrow at 9 percent. Dupuis currently has no debt, and the cost of equity is 15 percent. The current value of the firm is $735,000. What will the value be if Dupuis borrows $220,000 and uses the proceeds to repurchase shares? The corporate tax rate is 35 percent.
