Maddux Corporation has an EBIT of $$925,000$ per year that is expected to continue in

perpetuity. The unlevered cost of equity for the company is $13$ percent and the corporate

tax rate is $25$ percent. The company also has a perpetual bond issue outstanding with a

market value of $$2\mathrm{.}55$ million. What is the value of the company? $($Do not round

intermediate calculations and enter your answer in dollars, not millions of dollars,

rounded to $2$ decimal places, e$.$g$.,1,234,567\mathrm{.}89)$

Value of the company

The CFO of the company informs the company president that the value of the

company is $$5\mathrm{.}2$ million. Is the CFO correct?

Is the CFO correct?