Aussie Ltd has earnings before interest and tax (EBIT) per annum in perpetuity of $200,000. The tax rate is 30%. The firm is funded $50,000 of debt and $150,000 of equity. The cost of equity is 18% p.a. and the cost of debt is 6% p.a.

QUESTION 14

Given the information above, what is the appropriate discount rate if earnings before interest and after tax (EBIAT) are used to calculate the value of the firm?

	a.	20.79%
	b.	25.71%
	c.	18%
	d.	14.55%
	e.	None of the above