The debt is selling at par value-what is the value of firm

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Reference no: EM13811780

L.A. Clothing has expected earnings before interest and taxes of $2,200, an unlevered cost of capital of 16 percent and a tax rate of 34 percent. The company also has $2,900 of debt that carries a 7 percent coupon. The debt is selling at par value. What is the value of this firm?

HINT: Review M&M Proposition I & II

$13079.30

$11067.10

$9054.90

$10061.00

$12073.20

Reference no: EM13811780

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