Multiple Choice
An unlevered firm has a cost of capital of 14.6 percent and earnings before interest and taxes of $223,000.Assume the firm borrows $700,000 at a 7 percent rate of interest.The applicable tax rate is 34 percent.What is the value of the levered firm?
A) $1,946,082.19
B) $1,907,018.11
C) $1,246,082.19
D) $546,082.19
E) $547,018.11
Correct Answer:
Verified
Correct Answer:
Verified
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