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
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?
Select one:
a. $2.03M
b. $3.18M
c. $1.71M
d. $2.86M
e. $1.91M
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International Financial Management
Authors: Cheol Eun
9th Edition
1260788865, 9781260788860
