The Coffee Shop has expected earnings before interest and taxes of $14,600, an unlevered cost of capital of 12%, and debt with both a book and face value of $18,000. The debt has an annual 8.25%
Coupon. The tax rate is 35%. What is the value of the ﬁrm?
A) $81,640
B) $85,383
C) $87,778
D) $90,114
E) $92,309

Question

Quizplus · Accepted Answer

The Answer of The Coffee Shop has expected earnings before interest and taxes of $14,600, an unlevered cost of capital of 12%, and debt with both a book and face value of $18,000. The debt has an annual 8.25%
Coupon. The tax rate is 35%. What is the value of the ﬁrm?
A) $81,640
B) $85,383
C) $87,778
D) $90,114
E) $92,309

The Coffee Shop Has Expected Earnings Before Interest and Taxes