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What is the value of this firm

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Question - Suppose Caroline Matts Co, a sports shoes production company located in Toronto, has an unlevered cost of capital of 10% and expected earnings before interest and taxes of $180,000 each year.

The company has $1,200,000 in bonds outstanding that have an 12% coupon and pay interest annually. The bonds are selling at par value. What is the value of this firm? Assume the corporate tax of 45% is imposed.

Reference no: EM133047189

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