Multiple Choice
The Fruit Mart is an all-equity firm with a current cost of equity of 17.4 percent.The estimated earnings before interest and taxes are $169,500 annually forever.Currently, the firm has no debt but is in the process of borrowing $400,000 at 9.5 percent interest.The tax rate is 35 percent.What is the value of the unlevered firm?
A) $649,207
B) $753,571
C) $656,411
D) $719,307
E) $633,190
Correct Answer:
Verified
Correct Answer:
Verified
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