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Salem Tech is currently an all equity firm that has 95,000 shares of stock outstanding with a market price of $40 a share. The current cost of equity...
Salem Tech is currently an all equity firm that has 95,000 shares of stock outstanding with a market price of $40 a share. The current cost of equity is 12 percent and the tax rate is 35 percent. The firm is considering adding $200,000 of debt with a coupon rate of 9 percent to its capital structure. The debt will be sold at par value. What is the levered value of the equity?