The Montana Hills Co

Multiple Choice

The Montana Hills Co. has expected earnings before interest and taxes of $17,100, an unlevered cost of capital of 12.4 percent, and debt with both a book and face value of $25,000. The debt has an annual 6.2 percent coupon. If the tax rate is 34 percent, what is the value of the firm?

A) $91,016.13
B) $137,903.23
C) $99,516.13
D) $106,666.67
E) $146,403.23