Kline Construction Is an All-Equity Firm That Has Projected Perpetual

Multiple Choice

Kline Construction is an all-equity firm that has projected perpetual earnings before interest and taxes of $628,000.The current cost of equity is 17.6 percent and the tax rate is 35percent.The company is in the process of issuing $4.3 million of 8.3 percent annual coupon bonds at par.What is the levered value of the firm?

A) $3,824,318
B) $3,541,085
C) $3,422,225
D) $2,713,185
E) $3,385,695