The White Hills Co

Multiple Choice

The White Hills Co. has expected earnings before interest and taxes of $8,100, an unlevered cost of capital of 11%, and debt with both a book and market value of $12,000. The debt has an annual 8%
Coupon. The tax rate is 34%. What is the value of the firm?

A) $48,600
B) $50,000
C) $52,680
D) $56,667
E) $60,600