Thompson & Thomson Is an All Equity fiRm That Has

Multiple Choice

Thompson & Thomson is an all equity firm that has 500,000 shares outstanding.The company is in the process of borrowing €8 million at 9% interest to repurchase 200,000 shares of the outstanding equity.What is the value of this
firm if you ignore taxes?

A) €20.0 million
B) €20.8 million
C) €21.0 million
D) €21.2 million
E) €21.3 million