The Aggie Company Has EBIT of £50,000 and Market Value

Multiple Choice

The Aggie Company has EBIT of £50,000 and market value debt of £100,000 outstanding with a 9% coupon rate.The cost of equity for an all equity firm would be 14%.Aggie has a 35% corporate tax
Rate.Investors face a 20% tax rate on debt receipts and a 15% rate on equity.Determine the value of
Aggie.

A) £120,000
B) £162,948
C) £258,537
D) £263,080
E) £332,143