Great lakes shipping is an all-equity firm with anticipated


Great Lakes Shipping is an all-equity firm with anticipated earnings before interest and taxes of $439,000 annually forever. The present cost of equity is 16.4 percent. Currently, the firm has no debt but is considering borrowing $1.25 million at 8.5 percent interest. The tax rate is 36 percent. What is the value of the levered firm?

$2,163,171

$2,818,181

$2,406,519

$2,666,667

$2,588,547

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Financial Management: Great lakes shipping is an all-equity firm with anticipated
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