blue Industries has an EBIT of $12 million per year forecast in perpetuity. blue’s cost of equity is 15% and its tax rate is 28%. If Blue Industries borrows $30 million, what will be the value of the firm? Group of answer choices $76.4 million $66.0 million $80.0 million $57.6 million $30.8 million

Essentials Of Investments
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blue Industries has an EBIT of $12 million per year forecast in perpetuity. blue’s cost of equity is 15% and its tax rate is 28%. If Blue Industries borrows $30 million, what will be the value of the firm?

Group of answer choices $76.4 million

$66.0 million

$80.0 million

$57.6 million

$30.8 million 

Expert Solution
Step 1: Define of Value of Firm

Value of Firm includes the equity and debt of the company. It can be calculate with the help of future benefits from the business. 

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