Problem 13.17 – Cornerstone or Calvert Corporation

Essentials of Corporate Finance

Ross, Westerfield, and Jordan

10th Edition and 11th Edition

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Difficulty – Medium

Given the expected EBIT, cost of equity, borrowing rate, tax rate, and debt, determine the current value of the firm and then recompute the firm value if the firm takes on additional debt equal to a proportion of its unlevered value.

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