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EMC has EBIT of 100 million; Debt = $75 million; Cost of debt = 10%; Unlevered cost of capital = 12% qnd its tax rate

EMC has EBIT of 100 million; Debt = $75 million; Cost of debt = 10%; Unlevered cost of capital = 12% qnd its tax rate is 21%. Calculate the total value of the firm with leverage.

Formula

Vu= EBIT(1-T)/Ru

V_L= V_u + ( D*T)

A) $833

B) $849

C) $674

D) $950

E) $750

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