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In a World Without Distress Costs or Agency Problems,calculate the Value

Question 22

Multiple Choice

In a world without distress costs or agency problems,calculate the value of Bilever Co.if its perpetual EBIT is expected to be $1,000,000 per year based upon total debt of $200,000.The firm's cost of debt is 5% and its required return on firm's assets is 10%.Assume that Bilever is in the 30% marginal tax rate.


A) $14,000,000
B) $7,000,000
C) $5,600,000
D) none of the above

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