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QUESTION
La Desgmcia is currently an all equity rm that has 400,000 shares of stock out standing with a market price of $30 a share. The current cost of
La Desgracia is currently an all equity firm that has 400,000 shares of stock out- standing with a market price of $30 a share. The current cost of equity is 11.0% and the tax rate is 32%. The firm is considering adding $3.0 million of debt with a coupon rate of 8.0% to its capital structure. The debt will be sold at par value. What is the levered value of the firm's equity?
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