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An unlevered firm has a cost of capital of 16.7 percent and earnings before interest and taxes of $489,602. A levered firm with the same
An unlevered firm has a cost of capital of 16.7 percent and earnings before interest and taxes of $489,602. A levered firm with the same operations and assets has face value of debt of $650,000 with a coupon rate of 7.5 percent that sells at par. The applicable tax rate is 35 percent. What is the value of the levered firm?
A) $2,402,509.08 |
B) $2,133,136.53 |
C) $2,397,212.30 |
D) $2,398,256.67 |
E) $2,001,018.21 |
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