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A company has EBIT of $500,000, a growth rate of 5%, and faces a tax...

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Finance

A company has EBIT of $500,000, a growth rate of 5%, and faces a tax rate of 40%. To grow, the company must reinvest 50% of its EBIT in net operating assets. The company has $400,000 in 10% debt outstanding. A similar company with no debt has a cost of equity of 12%. According to the MM extension with growth, what is the firm's unlevered value?

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