The estimated earnings before interest and taxes are 239000


The Gift Mart is an all-equity firm with a current cost of equity of 19.6 percent. The estimated earnings before interest and taxes are $239,000 annually forever. Currently, the firm has no debt but is in the process of borrowing $400,000 at 9.5 percent interest. The tax rate is 30 percent. What is the value of the unlevered firm?

Answer

$849,207
$853,571
$856,411
$919,307
$926,667

 

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Finance Basics: The estimated earnings before interest and taxes are 239000
Reference No:- TGS0620378

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