What Is the Market Value of Barings, a Firm with Total

Multiple Choice

What is the market value of Barings, a firm with total assets of $100 million and $30 million in perpetual debt in its capital structure? Barings' cost of equity is 15%, and its cost of debt is 10%. Expected perpetual net operating income (EBIT) will be $17 million, and the marginal tax rate is 40%.

A) $86.0 million
B) $104.0 million
C) $98.0 million
D) $92.7 million