For the levered firm find the value of the levered firm and, Financial Management

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For the levered firm find the value of the levered firm and

Ajax has a tax rate of 30% and an EBIT of $50 million. The unlevered cost of capital is 14%. a. What is the value of the unlevered firm? What is the cost of equity for the unlevered firm? b. Now suppose that Ajax issues $90 million in debt to buy back stock. The cost of debt is 8%. For the levered firm, find the value of the levered firm and the cost of equity.

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Financial Management: For the levered firm find the value of the levered firm and

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Financial Management: For the levered firm find the value of the levered firm and

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