What is value of company-enoch-arden corporation

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Enoch-Arden Corporation has earnings before interest and taxes of $5 million and a 30 percent tax rate. It is able to borrow at an interest rate of 17 percent, whereas its equity capitalization rate in the absence of borrowing is 15 percent. The earnings of the company are not expected to grow, and all earnings are paid out to shareholders in the form of dividends. What is value of company with $5000000 in debt and with $500,000 Bankruptcy cost?

Reference no: EM132575100

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