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Purple Eagles Co. has EBIT of $40,000 and market value debt of $120,000 outstanding with a 9% coupon rate. The cost of equity for
Purple Eagles Co. has EBIT of $40,000 and market value debt of $120,000 outstanding with a 9% coupon rate. The cost of equity for an all equity firm would be 10%. It has a 40% corporate tax rate. Investors face a 16% tax rate on debt receipts and a 12% rate on equity. Determine the value of the company. O$228,000.29 $284,571.43 O $326,825.43 $362,480.28
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Principles of managerial finance
Authors: Lawrence J Gitman, Chad J Zutter
12th edition
9780321524133, 132479540, 321524136, 978-0132479547
