UNLEV Has an Expected Perpetual EBIT = $4,000

question 338

Multiple Choice

UNLEV has an expected perpetual EBIT = $4,000. The unlevered cost of capital = 15% and there are 20,000 shares of stock outstanding. The firm is considering issuing $8,800 in new par bonds to add financial leverage to the firm. The proceeds of the debt issue will be used to repurchase equity. The cost of debt = 10% and the tax rate = 34%. There are no flotation costs.

What is the value of UNLEV's equity after the restructuring?

• A) $11,792
• B) $12,600
• C) $12,819
• D) $13,592
• E) $16,461

---

Definitions:

Violent Crimes

Criminal acts that involve force or the threat of force against others, such as murder, rape, and assault.

Male Perpetrators

Refers to individuals who commit acts of violence, abuse, or crimes, with a focus on those who are male.

Eyewitness Testimony

Evidence provided by individuals who witnessed an event or crime, relying on their personal observations.

Absolutely Certain

The state of being completely confident and without a doubt about something.