Determine the total value

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Reference no: EM1351017

Firm L has debt with a market value of $200,000 and a yield of 9%. The firm's equity has a market value of $300,000, its earnings are growing at a 5% rate, and its tax rate is 40%. A similar firm with no debt has a cost of equity of 12%. Under the MM extension with growth, what would Firm L's total value be if it had no debt?

a. $358,421

b. $377,286

c. $397,143

d. $417,000

e. $437,850

Reference no: EM1351017

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