Graceful Funeral Group Expects Its Earnings Before Interest and Taxes

Multiple Choice

Graceful Funeral Group expects its earnings before interest and taxes to be $325,000 a year forever.Currently, the firm has no debt.The cost of equity is 19.5 percent and the tax rate is 21 percent.The company is in the process of issuing $3.7 million of bonds at par that carry an annual coupon rate of 6.5 percent.What is the unlevered value of the firm?

A) $1,455,524
B) $1,416,066
C) $1,191,500
D) $1,053,420
E) $1,316,667