Multiple Choice
An unlevered firm has a cost of capital of 13.8 percent and earnings before interest and taxes of $214,560.Assume the firm borrows $430,000 at an interest rate of 5.85 percent.The applicable tax rate is 35 percent.What is the value of the levered firm?
A) $1,209,518.70
B) $1,007,018.11
C) $1,161,108.70
D) $1,246,082.19
E) $1,105,018.11
Correct Answer:
Verified
Correct Answer:
Verified
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