Stevenson's Bakery Is an All-Equity Company That Has Projected Perpetual

Multiple Choice

Stevenson's Bakery is an all-equity company that has projected perpetual earnings before interest and taxes of $43,700 a year.The cost of equity is 15.2 percent and the tax rate is 34 percent.The company can borrow money at 7.15 percent.If the company borrows $50,000, what will be its levered value?

A) $187,613
B) $189,919
C) $206,750
D) $229,507
E) $203,682