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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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