Question
Kline Construction is an all-equity firm that has projected perpetual EBIT of $316,000. The current cost of equity is 12.2 percent and the tax rate
Kline Construction is an all-equity firm that has projected perpetual EBIT of $316,000. The current cost of equity is 12.2 percent and the tax rate is 39 percent. The company is in the process of issuing $932,000 worth of perpetual bonds with an annual coupon rate of 6.4 percent at par. What is the value of the levered firm?
Multiple Choice
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$1,580,000
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$1,755,556
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$1,422,000
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$1,849,518
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$1,943,480
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Taxation Of Individuals And Business Entities 2015
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
6th Edition
978-1259206955, 1259206955, 77862368, 978-0077862367
