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 $879 000.The current cost of equity is 18.3 per cent and the tax rate is 34 per cent.The company is in the process of issuing $6.2 million of 8.5 per cent annual coupon bonds at par.What is the levered value of the firm?

A) $5 278 164
B) $6 422 225
C) $7 385 695
D) $6 713 185
E) $5 541 085