Question
Bingo Corp. is a zero-growth firm with an expected EBIT of $400,000 and a corporate tax rate of 40%.Bingo uses $0.8 million of debt financing,
Bingo Corp. is a zero-growth firm with an expected EBIT of $400,000 and a corporate tax rate of 40%.Bingo uses $0.8 million of debt financing, and the cost of equity to an unlevered firm in the same risk class is 14%.
What is the value of the firm according to MM with corporate taxes?
a.$2.03M
b.$3.18M
c.$1.71M
d.$2.86M
e.$1.91M
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The Company Valuation Playbook Invest With Confidence
Authors: Charles Sunnucks
1st Edition
1838470816, 978-1838470814
