Problem:
Dupuis can borrow at 12.00 percent. Dupuis currently has no debt, and the cost of equity is 15 percent. The current value of the firm is $676,000. The corporate tax rate is 38 percent.
Requirement:
Question: What will the value be if Dupuis borrows $227,000 and uses the proceeds to repurchase shares?
Note: Explain all steps comprehensively.