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An unlevered firm has a cost of capital of 16% and earnings before interest and taxes of $225,000. A levered firm with the same operations

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An unlevered firm has a cost of capital of 16% and earnings before interest and taxes of $225,000. A levered firm with the same operations and assets has both a book value and a face value of debt of $850,000 with an 8% annual coupon. Assume no taxes, no bankruptcy. What is the value of equity for the levered firm? Select one: O A. 624,250 O B. 556,250 O C. 850,000 O D. 556,250

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