Management has estimated the firms earnings before interest, Financial Management

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Management has estimated the firms earnings before interest

Ready To Go is an all-equity firm specializing in hot ready-to-eat meals. Management has estimated the firm's earnings before interest and taxes will be $68,000 annually forever. The present cost of equity is 14.1 percent. Currently, the firm has no debt but is considering borrowing $450,000 at 8 percent interest. The tax rate is 34 percent. What is the value of the unlevered firm?

Select one: a. $323,017 b. $346,511 c. $314,141 d. $318,298 e. $305,200

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Financial Management: Management has estimated the firms earnings before interest

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