The Lanoi Company Has EBIT of $30,000 and Market Value

Multiple Choice

The Lanoi Company has EBIT of $30,000 and market value debt of $150,000 outstanding with an 8% coupon rate. The cost of equity for an all equity firm would be 12%. Aggie has a 30% corporate tax rate. Investors face a 20% tax rate on debt receipts and a 12% rate on equity. Determine the value of Aggie.

A) $130,500
B) $142,698
C) $248,537
D) $209,500
E) $332,143