L.A. Clothing has expected earnings before interest and taxes of $63,300, an unlevered cost of capital of 14.7 percent, and a combined tax rate of 23 percent. The company also has $11,000 of debt that carries a coupon rate of 7 percent. The debt is selling at par value. What is the value of this company?
A) $342,579
B) $273,333
C) $284,108
D) $334,101
E) $305,476

Question

Quizplus · Accepted Answer

The Answer of L.A. Clothing has expected earnings before interest and taxes of $63,300, an unlevered cost of capital of 14.7 percent, and a combined tax rate of 23 percent. The company also has $11,000 of debt that carries a coupon rate of 7 percent. The debt is selling at par value. What is the value of this company?
A) $342,579
B) $273,333
C) $284,108
D) $334,101
E) $305,476

LA Clothing