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Change Corporation expects an EBIT of $31,200 every year forever. The company currently has no debt,...

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Finance

Change Corporation expects an EBIT of $31,200 every yearforever. The company currently has no debt, and its cost of equityis 11 percent. a. What is the current value of the company? b.Supposed the company can borrow at 6 percent. If the corporate taxrate is 22 percent, what will the value of the firm be if thecompany takes on debt equal to 50 percent of its unlevered value?What if it takes on debt equal to 100 percent of its unleveredvalue? c. What will the value of the firm be if the company takeson debt equal to 50 percent of its levered value? What if thecompany takes on debt equal to 100 percent of its leveredvalue?

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