Calculate the Market Value of a Firm with Total Assets

Multiple Choice

Calculate the market value of a firm with total assets of $105 million and $50 million of 10% perpetual debt in the capital structure. The firm's cost of equity is 14% on the $55 million in equity in the capital structure. The perpetual EBIT is expected to be $9 million, and the marginal tax rate is 40%.

A) $88.6 million
B) $67.1 million
C) $114.3 million
D) $78.6 million