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Assigned Problem 3 A consultant has collected the following information regarding Young Publishing $3,000 million $800 million $0 million $480 million S32.00 Tax rate Debt ratio WACC MB ratio EPS DPS 40% 09.0 1090 1.00x $3.20 Total assets Operating income (EBIT) Interest expense Net income Share price The company has no growth opportunities (g0), so the company pays out all of its earnings as dividends (EPS DPS). The consultant believes that if the company moves to a capital structure financed with 20% debt and 80% equity (based on market values) that the cost of equity will increase to 1 1% and that the pre-tax cost of debt will be 10%. If the company makes this change, what would be the total market value (in millions) of the firm?

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