What is the value of the levered firm

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An unlevered firm has a cost of capital of 16 percent and earnings before interest and taxes of $225,000. A levered firm with the same operations and assets has both a book value and a face value of debt of $850,000 with an 8 percent annual coupon. The applicable tax rate is 34 percent. What is the value of the levered firm?

Reference no: EM13946859

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