Aggie has a 35 corporate tax rate investors face a 20 tax


The Aggie Company has EBIT of $70,000 and market value debt of $100,000 outstanding with a 9% coupon rate. The cost of equity for an all equity firm would be 14%. Aggie has a 35% corporate tax rate. Investors face a 20% tax rate on debt receipts and a 15% rate on equity. Determine the value of Aggie.

$258,537
$120,000
$355,938
$162,948
$263,080

 

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Finance Basics: Aggie has a 35 corporate tax rate investors face a 20 tax
Reference No:- TGS0605502

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